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Gorman-Rupp Down to Strong Sell on Weak Q1, Prevailing Risks

Zacks Equity Research

On May 18, Zacks Investment Research downgraded The Gorman-Rupp Company GRC to a Zacks Rank #5 (Strong Sell). Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market.

In the last three months, Gorman-Rupp’s shares have lost nearly 18.99%, underperforming the gain of 3.58% recorded by the Zacks categorized Machinery General Industrial industry.

Why the Downgrade?

Market sentiments have been weak for Gorman-Rupp for quite some time now, especially after the company reported lower-than-expected results for first-quarter 2017 on Apr 27. Earnings of 23 cents per share lagged the Zacks Consensus Estimate of 26 cents by 11.54%. Net sales were down 7.6% year over year.

For 2017, Gorman-Rupp expects uncertainties related to production and prices of oil as well as weak commodity prices to remain major headwinds. Weak results and cautious outlook have made investors skeptical about Gorman-Rupp’s future prospects.

Over the last 30 days, the Zacks Consensus Estimate on the stock decreased 12.4% to 92 cents for 2017 and 11.3% to $1.02 for 2018. Estimates for 2017 represent year-over-year decline of 5.15%.

Gorman-Rupp Company (The) Price and Consensus

 

Gorman-Rupp Company (The) Price and Consensus | Gorman-Rupp Company (The) Quote

Stocks to Consider

Gorman-Rupp has a market capitalization of $641.6 million. Some better-ranked stocks in the machinery industry include Kennametal Inc. KMT, Parker-Hannifin Corporation PH and Lincoln Electric Holdings, Inc. LECO. While both Kennametal and Parker-Hannifin sport a Zacks Rank #1 (Strong Buy), Lincoln Electric Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kennametal’s earnings estimates for fiscal 2017 and fiscal 2018 were revised upward in the last 60 days. Also, the company’s average earnings surprise for the last four quarters was a positive 6.24%.

Parker-Hannifin’s average earnings surprise for the last four quarters was a positive 14.94%. Also, earnings expectations for fiscal 2017 and fiscal 2018 improved over the past 60 days.

Lincoln Electric Holdings’ earnings estimates for 2017 and 2018 were revised upward in the last 60 days. Also, the company’s average earnings surprise for the last four quarters was a positive 4.66%.

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