The Gorman-Rupp Company (GRC): what the price assumes
In the published model solve dated 2026-Q2, anchored at $76.22, The Gorman-Rupp Company (GRC) is priced for +23.6% 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/GRC
Headline
| Field | Value |
|---|---|
| Ticker | GRC |
| Company | The Gorman-Rupp Company |
| Sector / Industry | Industrials |
| Current price | $76.22/sh |
| Composition | Industrial 21% / Fire 19% / Agriculture 12% / Construction 11% / Municipal 15% / Petroleum 4% / OEM 7% / Repair parts 12% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 7.9% |
| Operating margin today | 14.8% |
| Margin compression (value-band) | -6.9pp |
| Implied growth | 23.6% |
| Multiple paid | 22x operating income |
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 9.9% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | +0.98σ |
| cohort percentile (of 225 peers) | 57 |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
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 | 2.55x | 5 | expensive |
| Earnings | 2.48x | 5 | expensive |
| Relative | 1.44x | 5 | expensive |
| Growth | 1.04x | 3 | expensive |
Families that justify the price: 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 8.3%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $78.98 | 0.97x | yes | FCF base $0.1B, growth 4% (input: historical growth), terminal g 4.0%, WACC 8.3%, 5yr projection |
| DCF Exit Multiple | Growth | $73.41 | 1.04x | yes | Exit EV/EBITDA: 15.0x / 17.0x / 19.0x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $53.00 | 1.44x | yes | P/E 22.28x (blended: static sector reference 18x + trailing (TTM) 32x), scenarios: 18.8x / 22.3x / 25.8x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $25.53 | 2.99x | yes | BV/sh $16.71, ROE (TTM) 14.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $31.22 | 2.44x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $56.32 | 1.35x | yes | Rev $0.7B, growth 4% (input: historical growth; tapered), Terminal P/S: 2.4x / 2.9x / 3.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $50.64 | 1.51x | yes | EPS $2.38, growth 21% (input: historical EPS growth), PEG=1.52 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $18.50 | 4.12x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.08B × (1−23%) / WACC 8.3% → EPV (no growth) |
| Residual Income | Asset | $32.22 | 2.37x | yes | BV $16.71 + 5yr PV of (ROE (TTM) 14.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $29.92 | 2.55x | yes | √(22.5 × EPS $2.38 × BVPS $16.71) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $51.18 | 1.49x | yes | EBITDA $0.13B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $32.39 | 2.35x | yes | FCF $100.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $30.74 | 2.48x | yes | SBC-adj FCF $0.10B (FCF $0.10B − SBC $0.00B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $76.79 | 0.99x | yes | EPS $2.38 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $6.97 | 10.94x | yes | BV $16.71 × (ROIC 3.5% / WACC 8.3%) |
| P/Sales Sector | Relative | $66.46 | 1.15x | yes | Revenue $0.70B × sector P/S 2.5x |
| PEG Fair Value | Relative | $75.96 | 1.00x | yes | EPS $2.38 × (PEG 1.5 × growth 21.3% (input: historical EPS growth)) → PE 31.9x |
| Earnings Yield | Earnings | $25.73 | 2.96x | yes | EPS $2.38 / 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 | — |
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.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Pumps and pump systems (consolidated) | operating | enterprise | $682.0m | — | withheld | unresolved no unit value |
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
| Field | Value |
|---|---|
| Net debt | $231.8m |
| Net debt / NOPAT (after-tax) | 2.91x |
| Net debt / operating income (pre-tax) | 2.22x |
| Interest coverage | 5.0x |
| Share count CAGR (dilution) | 0.3% |
| Burning cash | no |
Bullet Takeaways
- No valuation family reaches the $87.53 price. The growth-DCF methods land near $66 to $80, the relative methods near $48 to $66, and the asset and earnings-power methods far below, between $17 and $30, so the price is a premium for quality the standard frames do not capture.
- Capital allocation is conservative and shareholder-friendly: Gorman-Rupp has a long record of dividend increases, it paid down $15 million of bank debt in the quarter while funding the $0.19 dividend, and it carries interest coverage near 4.5x.
- The first quarter was strong: net sales rose 7.7% to $176.6 million, EPS of $0.68 beat the $0.49 estimate, gross margin expanded to 32.5% from 30.7%, and the backlog stood at a healthy $247.9 million.
Bull Case
The clearest way to read Gorman-Rupp is through how it allocates capital, because the discipline is the whole investment case. This is a company that pays a steadily rising dividend, funded comfortably from operating cash flow, and uses the rest to pay down debt and reinvest in its own manufacturing rather than chasing acquisitions or financial engineering. In the first quarter it generated $22.0 million of operating cash flow, funded $4.3 million of capital spending and $5.0 million of dividends, and still reduced bank debt by $15.0 million. That order of priorities, fund the dividend, invest modestly in the business, then deleverage, is the signature of management that thinks in decades and values the balance sheet. For a family-influenced industrial with a long dividend record, the buyback-free, debt-reduction approach signals confidence in the durability of the cash flows rather than a need to manufacture per-share growth.
The business behind that discipline is a high-quality niche franchise. Gorman-Rupp designs and manufactures pumps and pumping systems for water, wastewater, construction, industrial, and firefighting applications, including, as the FY2025 10-K describes, "encased, fully-integrated water and wastewater pumping stations" sold for construction, industrial, and municipal water uses (FY2025 10-K, accession 0001193125-26-084820). Water and wastewater infrastructure is a long-cycle, replacement-driven end market with regulatory tailwinds, and a meaningful share of revenue comes from repair parts, which is recurring and high-margin. That mix is why the company can hold a gross margin above 32% and why the demand is steadier than a typical capital-goods name.
The recent results show the franchise compounding. First-quarter net sales rose 7.7% to $176.6 million, beating estimates, and EPS of $0.68 far exceeded the $0.49 estimate and rose from $0.46 a year earlier, helped by gross margin expanding to 32.5% from 30.7% on better labor and overhead leverage and a richer product mix. Adjusted EBITDA grew to $35.5 million, and the backlog of $247.9 million provides forward visibility. The valuation premium is real, with no method reaching the price, but it reflects the market paying for a durable, dividend-growing infrastructure compounder. The inverted read frames the embedded assumption as operating growth sustained for roughly six years, demanding but not extreme for a business with this consistency, and analysts forecast mid-teens earnings growth that would help close the gap to the price.
Bear Case
The bear case has to look for moat erosion, because the price assumes the franchise stays as durable as it has been, and there are places where that durability could be chipped away. Gorman-Rupp's edge is a reputation for reliable, application-engineered pumps and a large installed base that drives recurring repair-parts revenue. That moat is real but not impregnable. Larger, better-capitalized flow-control competitors, the kind with broader product lines and global distribution, can target the same municipal and industrial accounts, and the commoditized end of the pump market, where price competition is fiercest, is always pressing on the margins of the more specialized lines. If the product mix drifts toward more competitive, lower-margin applications, the above-32% gross margin that justifies the premium would compress, and the recurring parts annuity erodes if the installed base ages out to competitors' equipment.
The valuation leaves no room for that erosion. No valuation family reaches the price: the asset-based methods land between $24 and $30, the earnings-power value near $17, and even the most generous growth-DCF only reaches about $80, all against a $87.53 price (June 27, 2026). The stock trades at a price-to-earnings multiple near 35x against an estimated fair multiple closer to 23x, which is a substantial premium that depends on the quality and growth holding precisely as the bull case assumes. The implied duration of roughly six years of sustained growth is demanding for a slow-growing infrastructure supplier, and the framework characterizes the embedded assumption as elevated, above what the fundamentals comfortably support.
The end markets, while steady, are not immune to the cycle. Construction and industrial demand soften in a downturn, municipal water budgets are subject to public-funding cycles, and tariff and input-cost pressure can squeeze the margin that the quarter's improvement reflected. Gorman-Rupp carries about $293 million of gross debt with interest coverage near 4.5x, comfortable but not fortress-like, so a demand slowdown would pressure both the deleveraging and the dividend growth that anchor the bull case. A great niche industrial can still be a poor investment when the price already capitalizes a long run of uninterrupted compounding, and the methods that anchor to current earnings power sit a long way below the current price.
Valuation
Gorman-Rupp's X-ray has a consistent shape: no family reaches the price, which marks it as a quality premium the static methods cannot capture. The asset-based methods land lowest, with the simple and two-stage excess-return methods near $24 and $29, residual income near $30, and the Graham number near $29. The earnings-power value lands near $17 and the free-cash-flow methods near $25 to $26. The relative methods land in the middle, with a peer-multiple method near $59 and an EV/EBITDA method near $49. The growth-DCF methods land highest but still below the price, with a perpetual-growth DCF near $67 and an exit-multiple DCF near $80.
The inverted view names the premium. The price embeds operating growth sustained for roughly six years on a whole-company basis, computed against the company's strong but moderate growth profile, and the framework characterizes the embedded assumption as elevated. Current operating margin near 14.5% is healthy, and the price assumes that profitability and growth persist. In plain terms, the market is paying up for consistency and an infrastructure-linked end market, not for a high growth rate.
The honest synthesis is that this is a high-quality niche compounder trading at a premium to every standard method. The bull case is that the recurring repair-parts revenue, the water and wastewater end markets, and the disciplined capital allocation make the durability real, in which case the premium is the cost of owning a steady compounder. The bear case is that the price, at roughly 35x earnings against a fair multiple near 23x, already capitalizes a long, smooth run, and the methods that anchor to current earnings sit far below. The value depends on the quality holding exactly as the market assumes, with little margin for a margin slip, a demand cycle, or competitive pressure on the franchise.
Catalysts
The clearest near-term catalyst is the margin and order trajectory: first-quarter gross margin expanded to 32.5% from 30.7% on better operating leverage and mix, and the $247.9 million backlog provides forward visibility, so each print is a test of whether the margin gains hold. End-market demand is the key external driver, with water and wastewater infrastructure spending, construction, industrial, and firefighting applications setting the pace; municipal water funding cycles and infrastructure investment are the structural tailwinds. Capital allocation is a standing catalyst, with a long dividend-increase record, the $0.19 quarterly dividend, and continued debt reduction ($15 million paid down in the quarter) signaling management confidence. Input costs and tariffs are a watch item on the margin side. The recurring repair-parts revenue is the moat to monitor, since its durability underpins the premium valuation. Sentiment is constructive but the valuation is full, with a Buy-leaning consensus, price targets that range widely from the high $60s to roughly $88, and a price-to-earnings multiple near 35x against an estimated fair multiple closer to 23x, so the stock needs continued earnings growth, forecast in the mid-teens, to grow into its premium rather than re-rate down toward it.
Sources: StockTitan 10-Q, StockStory Q1, Simply Wall St valuation, MarketBeat
Peer Cohorts (Per Segment, With Filing Citations)
Pumps and pump systems (consolidated) (reported)
- FLS (FLOWSERVE CORP)
- FY2025 10-K: …industry competitors include: Sulzer Pumps; Ebara Corp.; Eagle Burgmann, which is a joint venture of two traditional global seal manufacturers; John Crane Inc., a unit of Smiths Group Plc; Weir Group Plc.; ITT Industries; and KSB SE & Co. KGaA. The pump and mechanical seal industry continues to undergo consolidation,…
- FY2025 10-K: …this Annual Report. Business Functions Our business segments share a focus on industrial flow control technology and have a number of common customers. These segments also have complementary product offerings and technologies that are often combined in applications that provide us a net competitive advantage. Our…
- IEX (IDEX CORP)
- FY2025 10-K: …process. The CODM considers Adjusted EBITDA budget and forecast-to-actual variances when making decisions about the allocation of operating and capital resources to each segment. Adjusted EBITDA is also used in determining the compensation of certain employees. 68 Table of Contents The HST segment designs, produces…
- FY2025 10-K: Lease liability 27.8 26.1 Restructuring 3.0 0.9 Accrued interest 11.7 12.7 Other 49.0 45.0 Accrued expenses $ 297.0 $ 278.7 5. Revenue Disaggregation of Revenue The Company has a comprehensive offering of products, including technologies, built to customers' specifications that are sold in niche markets throughout the…
- GGG (GRACO INC.)
- FY2025 10-K: …has been recast to conform to the current organizational structure. The Company has four operating segments which are aggregated into three reportable segments: Contractor, Industrial and Expansion Markets. The Contractor segment markets sprayers and equipment that apply paint to walls and other structures, texture…
- FY2025 10-K: …then supply to their customers. Industrial The Industrial division designs and manufactures liquid finishing and advanced fluid dispensing equipment; pumps to move chemicals, petroleum, food, and other fluids; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators.…
- XYL (Xylem Inc.)
- FY2025 10-K: …with product offerings in the filtration and separation, disinfection, and wastewater solutions, for municipal and industrial applications. In the Water Infrastructure segment we reach customers indirectly, through channel partners and distributors, directly and through our service capabilities. • Applied Water…
- FY2025 10-K: …factor in allocating resources to the segments. The CODM considers budget-to-actual variances on a quarterly basis for the profit measure to assess segment performance. Disaggregated asset information by segment is not provided to the CODM for review, therefore, such information is not presented. The following tables…
- ITT (ITT INC.)
- FY2025 10-K: …end-users. IP's customers operate in global infrastructure and natural resource markets such as energy, chemical and petrochemical, pharmaceutical, general industrial, marine, mining, pulp and paper, food and beverage, power generation and biopharmaceutical. IP's marketplace-recognized brands include Goulds Pumps TM…
- FY2025 10-K: …dedicated to supporting EPC firms as their needs are often distinct from those of distribution and end-user customers. The pump and valve markets we serve are highly competitive and fragmented. For most of our products, there are many regional competitors and a limited number of larger global peers. Primary customer…
- GTES (Gates Industrial Corporation plc)
- FY2025 10-K: …our hydraulic hoses. The ultimate performance of a hydraulic assembly, in which our products function as part of a hydraulic circuit, 8 Table of Content s depends not only on how well the components are made, but also on how well they complement each other. Our hydraulic fittings are manufactured in a wide assortment…
- FY2025 10-K: …have generally been increasing, leading to more wear and tear on vehicles and the replacement of products that we supply. A smaller portion of our power transmission aftermarket business is generated in emerging markets, which generally have a smaller base of installed equipment and relatively nascent distribution…
- HLIO (HELIOS TECHNOLOGIES, INC.)
- FY2025 10-K: ODM considers budget-to-actual variances for key measures when making decisions about allocating capital to the segments. The Hydraulics segment designs and manufactures hydraulic components and systems used to transmit power and control force, speed and motion. There are two categories based on Hydraulic system…
- FY2025 10-K: …in Other non-operating income, net on the Consolidated Statement of Operations for the year ended January 3, 2026. The components of the pre-tax gain recognized in USD were: • Proceeds to be received from sale, net of $ 10.5 outstanding CFP debt (all cash): $ 39.7 . • Carrying value of net assets disposed: $ 29.3 . •…
- MWA (MUELLER WATER PRODUCTS, INC.)
- FY2025 10-K: /or end use customers decide to delay purchasing, or determine not to purchase, our products or services. Our business depends on a small group of key customers for a significant portion of our sales. A majority of our products are sold primarily to distributors and our success depends on these third parties operating…
- FY2025 10-K: …to be issued in connection with our 2026 Annual Meeting of Stockholders. 44 Table of Contents Index to Financial Statements PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Financial Statements Index to financial statements Page number Reports of Independent Registered Public Accounting Firm (PCAOB ID:…
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.