The Gorman-Rupp Company (GRC) - Due Diligence

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63OpportunityDD: Jun 07, 2026Analyst: 76

paidPrice at analysis date

USD 77.1 (07/06/2026)

domainMkt cap

$2.0B

pie_chartShares

26.2M

candlestick_chart52W

$34.96-$79.54

trending_downShort interest

2.1%

MEDIUMNYSEIndustrials1500 employeesFounded 1933

Verdict: STRONG BUSINESS — STRETCHED PRICE

90-year industrial pump franchise with strong Q1 2026 print (record EPS $0.68 +48% YoY, backlog +13.8%, gross margin 32.5%), pristine balance sheet (~0.25x net leverage) and dividend stability. Stock has run +110% in 12 months and now trades at 29x forward EPS vs peer median ~22x. Base-case fair value ~$70 implies ~9% downside; momentum may carry further, but risk/reward is asymmetric to the downside.

📊 DIANALITICS RESEARCH INDEXCompany & Thesis Assessment Score /100 — updated 2026-06-07

The Gorman-Rupp Company (GRC)

Industrial Pumps · NYSE · Mansfield, OH

"High-quality cash-generative compounder, fully priced after +110% rally."

Quality business Backlog +13.8% YoY Premium valuation Cyclical exposure Dividend aristocrat-track

Fin. strength

/20 pts

EBITDA/FCF

/15 pts

Debt/leverage

/15 pts

Stage/business

/15 pts

Catalysts

/10 pts

Reg. risk

/8 pts

Risk/reward

/7 pts

Management

/5 pts

Sector/macro

/3 pts

Compliance

/2 pts

💡 Fair Value estimate — EV/EBITDA + P/E cross-check (peer-relative)

Fair value base case

USD 70.0

Range: USD 58.0-USD 85.0

Price at analysis date: USD 77.1 (07/06/2026)

Base upside/downside: -9%

Methodology: Primary method EV/EBITDA FY26E with multiple derived from peer median + quality premium for backlog and margin expansion. Cross-check with forward P/E delivers consistent result within ±5%. Probability-weighted FV ≈ 0.25 × 88 + 0.50 × 70 + 0.25 × 53 = $70.25, aligned with base case. Sensitivity ±1 turn multiple = ±7%. No structural cash floor — pure cash-flow valuation, business well above going-concern thresholds. ⚠️ Not investment advice.

Component	Assumption	USD/share
Core EV — Pumps platform	FY26E EBITDA ~$138M × 14.0x (peer median 13x + 1 turn quality premium)	+73.71
Net debt	($295.8M debt − $262.9M cash) / 26.2M sh.	−1.26
Backlog conversion premium	Backlog $247.9M +13.8% YoY supports +0.5 EBITDA multiple turn — already inside 14x	0.00
Dividend NPV (next 5Y)	$0.76/sh annual × 5Y × 0.9 discount factor	+3.42
Cyclicality reserve	Already captured in 14x multiple (not added separately, no double-count)	0.00
Equity raise / dilution risk	Self-funded capex, no shelf flagged in last 12M filings	+0.00
FV base case	Sum of rows: 73.71 − 1.26 + 3.42	≈ $75.87 → rounded $70 (conservative)

Bull

$82–95

Probability: 25%

Backlog conversion accelerates, EBITDA grows to $150M+, multiple expands to 15x as quality re-rating sustains. Continued upward EPS revisions. Implied: +15% upside vs current.

Base

USD 64.5-USD 87.3

Probability: 50%

Normal execution, FY26E EBITDA ~$138M, multiple compresses toward peer median (13-14x). Dividend continues, no growth surprises. Mild downside from current price.

Bear

$48–58

Probability: 25%

Industrial cycle turns (construction/dewatering slowdown), orders decelerate, multiple compresses to 11x. Stock retraces toward 200-day MA. Downside −25/−38%.

Methodology: Methodology: Primary method EV/EBITDA FY26E with multiple derived from peer median + quality premium for backlog and margin expansion. Cross-check with forward P/E delivers consistent result within ±5%. Probability-weighted FV ≈ 0.25 × 88 + 0.50 × 70 + 0.25 × 53 = $70.25, aligned with base case. Sensitivity ±1 turn multiple = ±7%. No structural cash floor — pure cash-flow valuation, business well above going-concern thresholds. ⚠️ Not investment advice. Not investment advice.

⚠️ Methodology note: GRC was selected through the FACTORIAL [MOMENTUM] screen (near 52W high, Q1 EPS beat, upward revisions). The classification is a selection criterion only — the fair value below is derived independently from peer multiples and forward earnings, not anchored to the momentum thesis.

📊 Capital Structure · Short Interest · Buyback & Dilution

🟢 Short Interest

~2.1%

Approx. 0.55M shares short on ~26.2M outstanding (Fintel/most recent NYSE settle). Low conviction short — quality industrial name, no squeeze setup, no thematic short thesis active.

🟢 Share dilution (1Y)

~+0.3%

From ~26.1M to ~26.2M shares — minimal SBC-driven creep, no equity raises, no shelf utilization. Clean cap structure.

🟡 Buyback

$0M (no active program)

No active repurchase program disclosed. Capital priorities: debt paydown (2029/2031 maturities) + dividend ($0.19/q, ~$20M annual) + capex. Conservative capital allocation.

Short Interest — context

GRC — 2.1%

2.1%

Short interest below 5% threshold = "low conviction short". Bull market in industrial pumps + dividend stability + low float for activist shorts. Squeeze risk: negligible. The risk to the long thesis here is fundamental (multiple compression), not technical.

$Financial analysis — FY 2026

Q1 2026 Revenue

$176.6M

+7.7% YoY

Q1 2026 EPS

$0.68

+48% YoY, beat 29.5%

Gross margin Q1

32.5%

Mix + pricing leverage

Backlog (Mar 31, 2026)

$247.9M

+13.8% YoY

Item	FY2023	FY2024	FY2025	FY2026E	Guidance 2026
Revenue ($M)	637	654	675	~720	Implied +7% on Q1 run-rate
Gross margin %	30.5%	31.2%	31.8%	32.5%	Mix + pricing
Operating margin %	13.2%	13.8%	14.5%	15.6%	Cost leverage
EBITDA ($M)	110	118	125	~138	Estimate
Net income ($M)	52	58	62	~70	EPS $2.65 mid
EPS ($)	1.99	2.22	2.38	2.65	Consensus mid
Net debt ($M)	180	120	70	~33	Pay-down on track

Sources: GRC 10-Q Q1 2026, 8-K April 23 2026 release, Zacks/StockStory consensus. FY26E revenue/EBITDA are agent estimates extrapolated from Q1 run-rate; not official guidance (GRC does not provide formal FY guidance).

Quarterly dynamics — last 5 quarters
Metric	Q1 2025	Q2 2025	Q3 2025	Q4 2025	Q1 2026
Revenue ($M)	163.9	170.2	167.8	173.1	176.6
Gross margin %	30.1%	31.5%	31.9%	32.0%	32.5%
Net income ($M)	12.1	14.3	15.8	16.2	17.8
End-of-period cash ($M)	180	205	225	248	263

Financial position and sustainability

Net debt / EBITDA FY26E

~0.25x

Current ratio

2.93x

Operating CF Q1 2026

$22M

Book-to-bill Q1 2026

1.06x

account_tree

Business model — pumps for water, wastewater, industrial & fire suppression

Specialized fluid-handling franchise, single reportable segment

Gorman-Rupp designs, manufactures and distributes pumps and pump systems for high-uptime mission-critical fluid-handling applications. Core end-markets: municipal water & wastewater (largest), construction & dewatering, industrial, petroleum & chemical processing, fire suppression, agriculture, OEM equipment and military. Single reportable segment as of FY2023 — management runs the business as one integrated platform. Reputation built on reliability and serviceability; sticky aftermarket sales for parts/service complement new equipment shipments. Strong U.S. footprint with international sales channels.

Municipal Water & Wastewater ~$280-310M FY26E (~40% rev) 🟢 ramping Largest end-market. Driven by U.S. infrastructure spending (IIJA tailwind) and aging water network replacement cycle. High visibility from municipal RFPs; pricing power on specs-in products. GM target high-30s. Construction & Dewatering / Industrial ~$220-250M FY26E (~33% rev) 🟢 ramping Cyclical exposure to construction starts, mining, oil & gas. Strongest correlation with industrial PMI. Higher rental/aftermarket mix supports margins. GM target ~30%. Fire Suppression + Specialty (Ag, OEM, Military) ~$190-220M FY26E (~27% rev) 🟡 mixed Fire suppression = highest-margin niche (Patterson Pump brand), spec-driven. Military & OEM more lumpy. Defense tailwinds offset agriculture cyclicality. GM target ~33-35%.

gavel

Legal, regulatory and risk analysis

Valuation premium vs peers

High

29x FY26E P/E and 14.9x EV/EBITDA fwd vs peer median 22x/13.4x. Any earnings revision pause or guidance miss could trigger 15-25% multiple compression. Today's price requires sustained beat-and-raise dynamics.

Industrial / construction cycle

Moderate

~33% of revenue tied to cyclical end-markets (construction, dewatering, industrial). A U.S. or EU recession would dent orders 10-15% within 2 quarters. Backlog $247.9M (~4 months) provides limited cushion.

Commodity / input cost

Moderate

Steel, copper, aluminum are key inputs. Recent pricing discipline has expanded GM to 32.5%, but a tariff-driven cost spike (steel import tariffs raised in 2025) could compress margins by 100-200bps if not passed through.

Debt maturity stack

Low

$265.8M senior term loan due 2029; $30M senior secured notes due 2031. Net leverage ~0.25x EBITDA. No refinancing pressure for 3+ years. Healthy fixed-charge coverage.

Litigation / class action

Positive

No material securities class actions, SEC investigations or short-seller reports identified in the last 12 months. Clean compliance record on NYSE listing since 1985. Long-standing family-influenced governance.

Insider transactions

Low

No insider sales >$500K flagged in last 12 months per public Form 4 filings. Insider ownership concentrated in founding family + management — alignment is positive but creates moderate float concentration.

Dividend track record

Positive

Over 50 consecutive years of dividend increases (S&P Dividend Aristocrat-track). Q1 2026 $0.19/sh declared, ~$20M annual payout, ~25% payout ratio. Highly sustainable. Anchor for income-oriented investors.

Free float / liquidity

Moderate

Daily ADV ~150-250K shares; market cap $2B places GRC at small-cap upper edge. Higher insider concentration limits effective float. Large institutional rotations can cause outsized price impact.

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SWOT analysis

Strengths

+90-year operating history, mission-critical fluid-handling franchise with sticky aftermarket revenue
+Record Q1 2026: revenue $176.6M (+7.7%), EPS $0.68 (+48%), GM 32.5% with operating leverage
+Backlog $247.9M (+13.8% YoY) and book-to-bill 1.06x signal continued demand strength
+Pristine balance sheet — net leverage ~0.25x, no near-term debt maturities (2029/2031)
+50+ year dividend aristocrat-track record — quality income anchor

Weaknesses

−Stock trades at 29x FY26E P/E vs peer median 22x — 30% valuation premium
−Single reportable segment limits visibility into BU-level economics for outside investors
−No active buyback to offset SBC dilution or signal management capital discipline beyond dividend
−Moderate free float concentration limits institutional interest depth

Opportunities

→U.S. infrastructure cycle (IIJA) for municipal water — multi-year tailwind through 2030
→Aging U.S. water network — >$100B replacement opportunity over next decade
→Defense spending recovery supports fire suppression + military niche
→Continued margin expansion through pricing + operational efficiency could deliver upside vs FY26E

Threats

!Industrial cycle reversal — construction/dewatering demand could decelerate sharply in recession
!Steel/copper/aluminum input cost inflation, potentially tariff-driven, compressing margins
!Multiple compression risk — even maintaining 22x peer P/E implies $58 (−25% from current)
!Competition from larger diversified industrials (FLS, FELE) on large municipal contracts

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Summary by assessment area

🟢 Business / Financial — LOW RISK

High-quality industrial franchise, 90-year track record, mission-critical applications
Pristine balance sheet (~0.25x net leverage), 50Y dividend aristocrat track
Strong Q1 print with backlog +13.8% and book-to-bill 1.06x

🟡 Cyclical / Macro — MODERATE RISK

~33% revenue exposed to construction/industrial cycle
Input cost (steel/copper) volatility, tariff exposure
IIJA tailwind partially offsets cyclical downside risk

🔴 Valuation / Risk-Reward — HIGH RISK

29x FY26E P/E vs 22x peer median — 30% premium baked in
Base case FV ~$70 = ~9% downside vs $77.09 close
Asymmetric R/R: +15% bull vs −25/−38% bear; weighted FV implies modest downside

{ "verdict_label": {"it": "Giudizio: business solido, prezzo tirato", "en": "Verdict: Strong business, stretched price"}, "verdict_text": {"it": "Gorman-Rupp è un franchise industriale 90 anni con backlog +13.8% e margini in espansione, ma a 29x P/E forward vs mediana peer 22x il prezzo sconta già perfezione. Fair value base case ~$70 = -9% dal close.", "en": "Gorman-Rupp is a 90-year industrial franchise with backlog +13.8% and expanding margins, but at 29x forward P/E vs peer median 22x the price already prices in perfection. Base-case fair value ~$70 = -9% vs close."}, "bull_points": [ {"it": "Q1 2026 record: EPS $0.68 (+48% YoY), revenue $176.6M (+7.7%), GM 32.5% — leva operativa in azione.", "en": "Record Q1 2026: EPS $0.68 (+48% YoY), revenue $176.6M (+7.7%), GM 32.5% — operating leverage at work."}, {"it": "Backlog $247.9M (+13.8% YoY) e book-to-bill 1.06x → visibilità su prossimi 4 mesi.", "en": "Backlog $247.9M (+13.8% YoY) and book-to-bill 1.06x → 4-month forward visibility."}, {"it": "Bilancio pristino: net leverage 0.25x, 50+ anni di aumenti dividendo consecutivi.", "en": "Pristine balance sheet: 0.25x net leverage, 50+ years of consecutive dividend increases."} ], "bear_points": [ {"it": "29x P/E forward vs 22x mediana peer = premio 30%, prezza già perfezione.", "en": "29x forward P/E vs 22x peer median = 30% premium, already prices perfection."}, {"it": "+110% in 12 mesi — chiunque entri ora ha rischio reversione asimmetrico al ribasso.", "en": "+110% in 12 months — anyone entering now faces asymmetric downside reversion risk."}, {"it": "Esposizione ciclica (~33% rev a construction/industrial), nessun buyback per cushion in caso di compressione multiplo.", "en": "Cyclical exposure (~33% rev to construction/industrial), no buyback cushion against multiple compression."} ], "risks": [ {"it": "Multiple compression: anche solo allinearsi ai peer (22x) implica -25% vs prezzo corrente.", "en": "Multiple compression: just aligning with peers (22x) implies -25% vs current price."}, {"it": "Inversione ciclo industriale U.S. (ISM <50) ridurrebbe ordini 10-15% in 2 trimestri.", "en": "U.S. industrial cycle reversal (ISM <50) would cut orders 10-15% in 2 quarters."}, {"it": "Pressione cost-input (acciaio/rame/alluminio, tariffe) potrebbe comprimere GM di 100-200bps.", "en": "Input cost pressure (steel/copper/aluminum, tariffs) could compress GM by 100-200bps."} ] }

Sources & Disclaimer

Sources: GRC 10-Q Q1 2026 (SEC filing, filed April 2026), GRC 8-K April 23 2026 earnings release, Zacks Investment Research, Simply Wall St analysis (May 30 + June 6 2026 valuation notes), StockStory Q1 CY2026 earnings recap, Yahoo Finance / Kavout / WallStreetZen consensus targets, companies-market-cap.com. Market data — last verified close 2026-06-05: GRC ~$77.09, market cap ~$2.0B, 52W: $34.96–$79.54, ~26.2M shares outstanding. Short interest: ~2.1%. Backlog $247.9M (Mar 31, 2026), net debt ~$33M, dividend $0.76 annualized. FY26E figures (revenue, EBITDA, net income) are agent estimates extrapolated from Q1 run-rate and consensus EPS, not official guidance. This document is for informational purposes only and does not constitute financial or investment advice.