ENERPAC TOOL GROUP CORP. (EPAC): what the price requires
At today's price, ENERPAC TOOL GROUP CORP. (EPAC) is priced for +9.2% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/EPAC
Headline
| Field | Value |
|---|---|
| Ticker | EPAC |
| Company | ENERPAC TOOL GROUP CORP. |
| Current price | $34.94/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 13.8% |
| Operating margin today | 19.2% |
| Margin compression implied | -5.4pp |
| Implied growth | 9.2% |
| Multiple paid | 17x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.4pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.05σ |
| cohort percentile (of 225 peers) | 29 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.98x | 5 | expensive |
| Earnings | 1.97x | 4 | expensive |
| Relative | 1.20x | 3 | expensive |
| Growth | 0.99x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $42.86 | 0.82x | yes | FCF base $0.1B, growth 4% (input: historical growth), terminal g 4.0%, WACC 8.7%, 5yr projection |
| DCF Exit Multiple | Growth | $35.31 | 0.99x | yes | Exit EV/EBITDA: 12.9x / 14.9x / 16.9x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $29.21 | 1.20x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 15.1x / 18.0x / 20.9x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $17.69 | 1.98x | yes | BV/sh $7.79, ROE (TTM) 21.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $26.43 | 1.32x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $25.98 | 1.34x | yes | Rev $0.6B, growth 4% (input: historical growth; tapered), Terminal P/S: 2.4x / 2.9x / 3.4x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $14.07 | 2.48x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.10B × (1−26%) / WACC 8.7% → EPV (no growth) |
| Residual Income | Asset | $25.19 | 1.39x | yes | BV $7.79 + 5yr PV of (ROE (TTM) 21.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $16.70 | 2.09x | yes | √(22.5 × EPS $1.59 × BVPS $7.79) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $27.82 | 1.26x | yes | EBITDA $0.13B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $20.98 | 1.67x | yes | FCF $110.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $18.35 | 1.90x | yes | SBC-adj FCF $0.10B (FCF $0.11B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $1.33 | 26.27x | yes | EPS $1.59 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $3.26 | 10.72x | yes | BV $7.79 × (ROIC 3.6% / WACC 8.7%) |
| P/Sales Sector | Relative | $29.88 | 1.17x | yes | Revenue $0.63B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $17.19 | 2.03x | yes | EPS $1.59 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $88.8m |
| Net debt / NOPAT (after-tax) | 1.04x |
| Net debt / operating income (pre-tax) | 0.77x |
| Share count CAGR (buyback) | -3.7% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- What the static models miss about Enerpac is the quality of a small, branded niche: a 20 percent operating margin and a 21 percent return on equity from a high-pressure hydraulic-tools franchise with real switching costs. At $36.46 the price is justified by the relative-multiple and growth methods while the asset and earnings-power frames call it expensive.
- The latest quarter was mixed beneath the headline: net sales rose 6 percent to $154.8 million with products growing 6 percent organically, the best in ten quarters, but service revenue fell 17 percent organically and pulled gross margin down 410 basis points to 46.4 percent.
- The balance sheet is a strength and the capital story is disciplined: leverage of just 0.6 times, an untapped revolver, an active acquisition pipeline, and a completed $65.9 million buyback, with full-year adjusted EPS guided to $1.85 to $1.92.
Bull Case
Traditional valuation models look at Enerpac and see a sub-$700-million-revenue industrial that earns a modest absolute profit, then anchor on book value and conclude it is expensive. What they miss is the economics of a branded niche. Enerpac's Industrial Tools and Service segment supplies high-pressure hydraulic and mechanical tools to refinery, petrochemical, infrastructure, and heavy-industry customers (EPAC FY2025 10-K, accession 0000006955-25-000030), and in that niche the brand carries genuine pricing power and switching costs: when a maintenance crew standardizes on Enerpac's high-force tools for a critical lift or bolting job, the cost of switching to an unproven alternative on a safety-critical task is high. That is why the company earns a 20 percent operating margin and a 21 percent return on equity from a business the size of a single division at a larger industrial, returns the asset-based models cannot explain from a $7.79 book value per share.
The margin story is the ASCEND self-help program working. Management has driven adjusted operating margins higher through pricing, product mix, and cost discipline, and the second quarter showed the product engine accelerating: net sales rose 6 percent to $154.8 million with product sales up 6 percent organically, the strongest product growth in ten quarters. The company holds full-year adjusted EPS guidance of $1.85 to $1.92 and free cash flow of $100 million to $110 million on revenue of $635 million to $650 million. A high-margin, cash-generative tool maker compounding mid-single-digit organic product growth is exactly the kind of quality the static frames undervalue.
The capital allocation reinforces the case. Leverage is just 0.6 times with an untapped revolver, so Enerpac has ample capacity for the disciplined acquisitions management has flagged as a central element of its plan, and it has been retiring shares, completing a $65.9 million buyback program and shrinking the count about 3.7 percent a year. The relative-valuation method lands near $29 and the growth-DCF methods bracket the price, with the exit-multiple DCF right at $36 (June 27, 2026) and perpetual-growth DCF at $43. At a low-20s P/E the stock trades below larger comparable industrials like Ingersoll Rand and ITT. The bull case is a high-quality, high-margin niche franchise with a clean balance sheet and a margin-expansion program, where the durable economics are worth more than the asset methods credit.
Bear Case
The bear case is best framed around how much the valuation methods disagree, because that disagreement is the warning that the price rests on a generous reading of normalized earnings. The methods span from an earnings-power value near $14 to a perpetual-growth DCF near $43 on the same company, and the conservative end is the more honest read. Earnings power value, computed on normalized five-year-average operating income, lands at $14 because Enerpac's profitability has been depressed for parts of that window and the ASCEND-driven 20 percent margin is recent, not yet proven across a full cycle. The simple excess-return method lands at $18 and residual income at $25, both well below the price. When the asset and earnings-power frames cluster in the teens-to-twenties and only the growth-DCF and relative-multiple methods reach the price, the market is paying for margin durability that the long-run record does not yet support.
The second pressure showed up directly in the quarter. Service revenue fell 17 percent organically, which dragged gross margin down 410 basis points to 46.4 percent. The service business is supposed to be the sticky, recurring, high-margin complement to product sales, so a sharp service decline is exactly the wrong kind of weakness: it questions whether the switching-cost moat is as durable as the bull case assumes. Full-year organic growth is guided to just 1 to 3 percent, which is barely above flat, and the price embeds about 11 percent operating growth, a meaningful gap between what the market pays for and what management expects to deliver.
The third issue is end-market and scale exposure. Enerpac's customers are concentrated in refinery, petrochemical, infrastructure, and heavy industry, all cyclical capital-spending and maintenance markets, so a slowdown in industrial activity hits both product and service demand. At under $700 million of revenue the company is small enough that a few large-project deferrals move the numbers, and the acquisition strategy that the bull case celebrates is also a risk: buying tool businesses to supplement low organic growth means paying acquisition multiples and taking integration risk. The static valuation floor in the teens to twenties is what the price would test if the recent margin gains prove cyclical rather than structural. The franchise is good; the disagreement among the methods says the price assumes the best-case margin holds, and the service decline is the first crack in that assumption.
Valuation
Enerpac is a case where the model disagreement carries the analysis. The price of $36.46 is characterized as justified by the relative-multiple and growth-DCF families while the asset-based and earnings-power frames call it expensive.
The X-ray shows the spread. The growth methods bracket the price: perpetual-growth DCF at $42.67 and the exit-multiple DCF right at $36.43 on 4 percent historical growth, with the discounted-future-market-cap method at $27.10. The relative-valuation method lands at $29.21 on an 18 times sector P/E. The conservative methods are well below: earnings power value at $14.03 on normalized EBIT, the simple excess-return method at $17.69 off a $7.79 book value per share, and residual income at $25.19. The gap between the $14 earnings-power value and the $43 growth DCF is the central tension, and it traces to whether the recent 20 percent margin is the normalized level or a cyclical peak.
The honest synthesis is that the conservative methods are likely the more reliable guide here, because they refuse to assume the recent margin expansion is permanent. The relative read near $29 and the inversion center near $31 sit just below the price, suggesting Enerpac is fairly valued to modestly rich on a normalized view, with upside only if the ASCEND margins prove structural and product growth sustains. The deciding variables are margin durability and the recovery of the service business, whose 17 percent organic decline is the near-term worry. The asset and earnings-power floors in the teens are what the price would test if the margin gains reverse; the growth-DCF reads near the price are what holds if they stick. The analyst targets, which span a wide $33 to $73, capture exactly that uncertainty.
Catalysts
The fiscal second-quarter 2026 report on March 25 was the most recent catalyst and a mixed one. Net sales rose 6 percent to $154.8 million with product sales up 6 percent organically, the strongest in ten quarters, but service revenue fell 17 percent organically, pulling gross margin down 410 basis points to 46.4 percent. GAAP EPS of $0.31 fell year over year while adjusted EPS held at $0.39. Management narrowed full-year 2026 guidance to net sales of $635 million to $650 million, organic growth of 1 to 3 percent, adjusted EBITDA of $158 million to $163 million, adjusted EPS of $1.85 to $1.92, and free cash flow of $100 million to $110 million. The next print is the test of whether service revenue stabilizes and product momentum continues.
The capital-deployment catalysts are central to the story. With leverage at just 0.6 times and an untapped revolver, management has flagged an active acquisition pipeline as a key element of its plan alongside organic investment and buybacks, and it completed a $65.9 million repurchase program initiated in October 2025. The ASCEND margin-expansion program is the operating catalyst to monitor, since the durability of the recent margin gains is the swing factor for valuation. End-market demand in refinery, petrochemical, infrastructure, and heavy industry is the macro variable. Analyst targets span a wide $33 to $73 range with mixed ratings, so service recovery and any bolt-on acquisitions are the likely catalysts to move sentiment.
Sources: StockTitan EPAC Q2 2026 results, Sahm Capital Q2 earnings and buybacks, Investing.com EBITDA and multiple, MarketBeat EPAC forecast.
Peer Cohorts (Per Segment, With Filing Citations)
Industrial Tools & Services (IT&S) (reported)
- NDSN (NORDSON CORPORATION)
- (no filing in the citation store)
- IEX (IDEX CORP)
- (no filing in the citation store)
- GTES (Gates Industrial Corporation plc)
- (no filing in the citation store)
- KMT (KENNAMETAL INC)
- (no filing in the citation store)
- GRC (The Gorman-Rupp Company)
- (no filing in the citation store)
- FELE (FRANKLIN ELECTRIC CO., INC.)
- (no filing in the citation store)
- CW (CURTISS-WRIGHT CORPORATION)
- (no filing in the citation store)
- ZWS (ZURN ELKAY WATER SOLUTIONS CORPORATION)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.