ENERPAC TOOL GROUP CORP. (EPAC): what the price assumes

In the published model solve dated 2026-Q2, anchored at $37.61, ENERPAC TOOL GROUP CORP. (EPAC) is priced for +5.8% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/EPAC

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

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.

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 8.8%); the inversion above states its own rate.

Per-Model Detail (n=18)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Enerpac keeps more than half of every sales dollar as gross profit, at 53.0% in the quarter ended May 31, 2026, which is what selling branded high-force hydraulic tools through distribution looks like when it works.
• The soft spot is the service and rental line, roughly 19% of revenue, where organic revenue fell 8% year over year and management expects further near-term pressure.
• On July 7, 2026 the company agreed to buy Specialized Fabrication Equipment Group for approximately $451.4 million in cash, roughly a quarter of its own market value, with closing no earlier than September 1, 2026.

Bull Case

The moat argument for Enerpac is visible in one line of the income statement. In the quarter ended May 31, 2026 the company kept 53.0% of net sales as gross profit, up 260 basis points on the year, helped by an expected refund of tariffs imposed under emergency economic powers legislation. Strip out that help and the level is still well clear of the broader industrial-tools cohort, where ZWS runs a 45.4% gross margin, IEX 44.4%, GTES 39.6% and KMT 31.9%. Tools that lift bridges and pull turbine casings apart are not bought on price. They are bought on whether the thing holds.

The reason that pricing sticks is in what the segment actually is. The annual report describes it as a global supplier of branded hydraulic and mechanical tools and services to a broad array of end markets, including refinery/petrochemical; general industrial; industrial MRO; machining & manufacturing; power generation; infrastructure; mining and other markets, sold through distributors rather than direct. A maintenance engineer at a refinery specifies a brand for a bolting job once and then reorders it for a decade, and the company points to its cost structure, strategic global sourcing capabilities and global distribution as what holds that position. The economics agree: a trailing operating margin around 20.2% puts Enerpac third in a cohort of nine, behind NDSN at 26.4% and level with IEX at 20.7%, on a fraction of their revenue.

The returns follow from the same place. Return on equity runs about 22.0% on a book value of $8.22 a share, which is the arithmetic signature of a business that needs very little capital to make a dollar. Hydraulic tools are assembled, not smelted. That is why the third quarter of fiscal 2026 turned $167.6 million of net sales into $29.8 million of net earnings and $0.58 of diluted earnings per share, against $22.0 million and $0.41 a year earlier. Operations threw off $69 million over the first nine months of the year, up from $56 million across the same stretch of fiscal 2025.

Management has been spending that cash on its own shares. Under the repurchase program authorized in October 2025, roughly 420,000 shares were bought back in the third quarter for about $15 million, with roughly $120 million of the $200 million authorization still available. The share count has been shrinking around 4% a year over the past four years. For a company this size that is a meaningful, quiet transfer of the business to whoever stayed.

Then there is the deal, which is the first big swing in years. Enerpac has agreed to pay approximately $451.4 million in cash, plus about $20.6 million of restricted stock to the target's key people, for Specialized Fabrication Equipment Group, described by the company as a global provider of specialized fabrication, welding, portable machining and material-handling equipment. The lender side is already arranged: on July 7, 2026 the revolving credit facility was increased from 400.0 million dollars to 625.0 million. Bought at the right price, a second premium brand platform running through the same distribution network is exactly how a niche tool company gets bigger without getting worse.

Bear Case

The half of Enerpac that is supposed to smooth the cycle is the half that is shrinking. Service and rental is roughly 19% of revenue, and in the quarter ended May 31, 2026 its organic revenue fell 8% year over year while product sales rose 5%. Management describes an ongoing service improvement plan and told investors to expect near-term pressure from the Service business and geopolitical events. Service is where a tool company is supposed to be hardest to dislodge, because it is delivered by people who are already on the customer's site. When that line is the one going backwards, the competitive question is not about the tools at all.

Visibility is thin enough that a bad quarter arrives with no warning. The annual report notes a relatively short order-to-ship cycle and order backlogs of $54 million and $41 million at August 31, 2025 and 2024, respectively. Set that against annual sales the company now guides to a range of $635 million to $645 million and the backlog covers roughly a month. Enerpac sells into refinery turnarounds, infrastructure projects and mining maintenance, all of which get deferred quickly when customers get nervous, and there is almost no order book to cushion the gap.

The company has already trimmed what it expects. Full-year fiscal 2026 net sales guidance was narrowed to $635 million to $645 million from $635 million to $650 million, organic growth was cut to a range of 1% to 2% from 1% to 3%, and the profit outlook came down alongside it. That is a business growing at roughly the rate of industrial inflation, which sets a low ceiling on how much of the price can be paid for by growth alone.

Quality of the recent earnings deserves a look too. The 260 basis point improvement in gross margin includes a benefit from an expected tariff refund, and reported earnings per share for the quarter carry an eight cent contribution from the same item. Refunds do not repeat. A reader comparing $0.58 against $0.41 a year earlier is comparing a quarter that had that help against one that did not.

Which brings the balance sheet to the front, because it is about to change character. At May 31, 2026 Enerpac carried 115.7 million dollars of cash against 184.8 million of borrowings, for a net position around 69.1 million dollars on a funded-debt basis and roughly 107.4 million once lease obligations are included. That is close to nothing. The company has now committed roughly 451.4 million dollars of cash to buy SFE Group, and expanded its revolver from 400.0 million dollars to 625.0 million to pay for it. The transaction has not closed, and cannot close before September 1, 2026, with an outside date of November 1, 2026. When it does, a company that has spent years being conservatively financed becomes a company carrying real leverage into an end market its own guidance says is decelerating. The tools business will be fine. The question is what the interest bill does to the returns that made this stock worth owning.

Valuation

The methods split cleanly here, and the split is the information. The forward-growth methods land essentially level with the price, and the peer-multiple methods sit about 13% under it. The asset-value methods and the earnings-power methods are much further away, with the price sitting roughly 77% and 80% above their central estimates respectively. Two frames say this is a reasonable price for the business. Two say you are paying well past what the assets and the current earnings stream support on their own.

Inverted, the demand the price makes is modest. At roughly fifteen times company-wide operating income, today's $34.67 embeds operating growth of about 5.9% a year across a five-year stage. That is inside the pace Enerpac has recently delivered, and against the sector the multiple sits in the lower half of the peer range. The figure is sensitive to the required return used to derive it, moving by roughly six points for each point of change in that rate, so read the shape rather than the decimal. The shape is a market asking for mid-single-digit compounding from a company guiding to 1% to 2% organic growth this year and expecting to buy the difference.

Why the earnings-power lens objects is worth understanding rather than dismissing. It capitalizes a five-year average of operating income with no growth at all, and Enerpac's five-year history contains a transformation program, a divestiture and a restructuring, so the average sits well below what the business earns now. The asset lens objects for a simpler reason: book value is $8.22 a share against a $34.67 price, because a company that assembles high-margin tools out of other people's steel does not carry much balance sheet. Neither objection is evidence that the price is wrong. Both are evidence that whatever the price is worth is worth it because of the brand and the distribution rather than because of anything you could liquidate.

The cohort supports the premium at the margin line and questions it on growth. Enerpac's roughly 20.2% trailing operating margin beats GRC at 14.5%, GTES at 13.1%, FELE at 12.5% and KMT at 9.4%, and trails NDSN at 26.4%. But CW grew revenue 12.2% over its trailing year, ZWS 10.0% and FELE 8.0%, while Enerpac grew about 4.2%. The company earns like the better names in the group and grows like the slower ones, which is a reasonable description of why the multiple sits where it does.

Solvency, as the report reads it today, is the cleanest part and the part with the shortest shelf life. Net debt of $69.1 million at May 31, 2026 against 115.7 million dollars of cash is barely leverage at all, free cash flow runs above 100 million dollars a year, and the share count has been falling about 4% annually. All of that describes the company before the SFE Group purchase settles. The 451.4 million dollars of cash consideration and the enlarged revolver behind it will reset those numbers, and any judgment about the balance sheet made from the figures above has a closing date attached to it.

Catalysts

The dominant event is a pending acquisition. On July 7, 2026 Enerpac signed a definitive agreement to acquire Specialized Fabrication Equipment Group LLC, a global provider of specialized fabrication, welding, portable machining and material-handling equipment, for approximately $451.4 million in cash plus roughly $20.6 million in restricted stock units issued to SFE Group key personnel in place of transaction bonuses. Closing cannot occur before September 1, 2026, the parties set an outside date of November 1, 2026 with limited extensions available to December 31, 2026, and antitrust filings were due within ten business days of signing. Until those clearances land, none of it is in the numbers.

The financing moved first. Effective July 7, 2026 the company amended its credit agreement with PNC Bank to raise the revolving facility from 400.0 million dollars to 625.0 million, a 225.0 million dollar increase provided by PNC as incremental revolving lender. Read alongside a cash balance of $115.7 million at May 31, 2026, the arithmetic of how this gets paid for is not mysterious. The next reported quarter is the one that shows what the combined balance sheet looks like.

Two smaller items are worth holding in view. Fiscal 2026 guidance was narrowed and lowered on July 7, with the net sales range moving to $635 million to $645 million and organic growth to 1% to 2%, on continued softness in the service business and disruption management attributed to conflict in the Middle East. And on July 23, 2026 the board appointed Kevin J. Hagen as Principal Accounting Officer and Global Controller, replacing Patrick J. Dawson in that role; Hagen joined the company only in June 2026. A change in the accounting seat weeks before a purchase of this size closes is not a red flag on its own, but it is worth noticing who signs the first set of combined statements.

Peer Cohorts (Per Segment, With Filing Citations)

Industrial Tools & Services (IT&S) (reported)

• NDSN (NORDSON CORPORATION)
• FY2025 10-K: …(150,523) (136,175) Corporate expenses (52,628) (57,335) Operating profit $ 711,725 $ 674,001 Segment EBITDA for IPS decreased 10 basis points due to lower organic sales. Segment EBITDA for MFS increased 40 basis points due to favorable mix from lower organic sales related to the divested contract manufacturing…
• FY2025 10-K: …stages of an electronics customer's production and measurement and control processes, such as surface treatment, precisely controlled dispensing of material and test and inspection to ensure quality and reliability. Applications include, but are not limited to, semiconductors, printed circuit boards, electronic…
• IEX (IDEX CORP)
• FY2025 10-K: …cutters, pneumatic lifting and sealing bags for vehicle and aircraft rescue, environmental protection and disaster control and jumping cushions for building rescue for the rescue market. Fire & Safety's customers are original equipment manufacturers as well as public and private fire and rescue organizations. Fire &…
• FY2025 10-K: …equipment and precision photonic solutions, technical ceramics and hermetic sealing products and porous material structures and flow control solutions. The following table summarizes the percentage of total HST sales generated by each end market served: *Beginning in 2025, Life Sciences also includes analytical…
• GTES (Gates Industrial Corporation plc)
• FY2025 10-K: …manufacturer of innovative, highly engineered power transmission and fluid power solutions. We offer a broad portfolio of products to diverse aftermarket channel customers, and to original equipment manufacturers ("OEM") as specified components, with the majority of our revenue coming from aftermarket channels. Our…
• FY2025 10-K: …products represented approximately 62% of our total net sales for Fiscal 2025. Our Fluid Power segment includes hoses, tubing and fittings designed to convey hydraulic fluid at high pressures in both mobile and stationary applications, and other high-pressure and fluid transfer hoses. Our fluid power products…
• KMT (KENNAMETAL INC)
• FY2025 10-K: …manufacturing capabilities in combination with varying levels of customization to solve our customers' toughest challenges and deliver improved productivity for a wide range of applications . Metal Cutting markets its products under the Kennametal ® , WIDIA ® , WIDIA Hanita ® and WIDIA GTD ® brands through its direct…
• FY2025 10-K: …manufacturing capabilities in combination with varying levels of customization to solve our customers' toughest challenges and deliver improved productivity for a wide range of applications. Metal Cutting markets its products under the Kennametal ® , WIDIA ® , WIDIA Hanita ® and WIDIA GTD ® brands through its direct…
• GRC (The Gorman-Rupp Company)
• FY2025 10-K: …Many of the larger units comprise encased, 3 Table of Contents fully-integrated water and wastewater pumping stations. In certain cases, units are designed for the inclusion of customer-supplied drives. The Company's larger pumps are sold principally for use in the construction, industrial, water and wastewater…
• FY2025 10-K: …(1) loss of key personnel; (2) intellectual property security; (3) growth through acquisitions; (4) the Company's indebtedness and how it may impact the Company's financial condition and the way it operates its business; (5) impairment in the value of intangible assets, including goodwill; (6) defined benefit pension…
• FELE (FRANKLIN ELECTRIC CO., INC.)
• FY2025 10-K: …for the Company's growth as a global provider of water and energy systems, through geographic expansion and product line extensions, leveraging its global platform and competency in system design, all while consistently offering the best value to its customer. Markets and Applications The Company's business consists…
• FY2025 10-K: …compounded annual sales growth in developing regions in recent years. Water Systems competes in each of its targeted markets based on product design, quality, performance, availability and price. The Company's principal competitors in the specialty water products industry are Grundfos Management A/S, Pentair, Inc.…
• CW (CURTISS-WRIGHT CORPORATION)
• FY2025 10-K: …production orders to begin materializing by the middle of the next decade. General Industrial We derive revenue from our widely diversified offering to the general industrial market, which primarily consists of electronic sensors and control systems, electro-mechanical actuation, and surface treatment services. We…
• FY2025 10-K: …investments in research and development ("R&D") to fuel both innovation and organic growth. We also utilize a strong and healthy balance sheet to implement a disciplined capital allocation strategy prioritized by acquisitions as well as returns to shareholders, principally through share repurchases as well as…
• ZWS (ZURN ELKAY WATER SOLUTIONS CORPORATION)
• FY2025 10-K: …in which we participate are relatively fragmented with competitors across a broad range of industries, sectors, and product lines. Although competition exists across all of our businesses, we do not believe that any one competitor directly competes with us across the breadth of all of our product lines. We believe…
• FY2025 10-K: …to the extent employment opportunities multiply post-pandemic, causing the search for and retention of talent to become more competitive. This disruption of our employees, distributors, suppliers and customers may impact our sales and future operating results. The unpredictable nature of new infectious diseases…

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.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• 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.