“Not flashy, but they get the job done” is a phrase I’ve heard more than a few times when doing due diligence on Gorman-Rupp (GRC). That phrase could just as well apply to the entire company and its management team – Gorman-Rupp won’t overawe you with any of its performance metrics, but a 20-year annualized return of around 11% (with dividends reinvested) isn’t bad next to 8.6% or so return of the S&P 500. While revenue growth hasn’t been all that stellar, free cash flow margins have crept up over time to a level (in the 12%’s recently) that compares quite well with many industrials.
With a lot of leverage to municipal water, Gorman-Rupp is a potential play on a water infrastructure replacement and build-out cycle in the U.S., if you believe such a cycle is likely to occur. Beyond that, there are opportunities for the company to leverage growth in areas like agriculture and construction and expand core technology into adjacent non-water markets. Still, I think investors shouldn’t let their imagination get too wild with this one – I regard Gorman-Rupp as an “is what it is” type of company and stock likely to continue generating long-term total returns in the high single-digits.
Read the full article at Seeking Alpha:
Gorman-Rupp: Recovery Leverage With A Possible Water Infrastructure Kicker
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