Should You Think About Buying The Gorman-Rupp Company (NYSE:GRC) Now?
The Gorman-Rupp Company (NYSE:GRC), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. The recent jump in the share price has meant that the company is trading at close to its 52-week high. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Gorman-Rupp’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Gorman-Rupp
What's The Opportunity In Gorman-Rupp?
According to our valuation model, Gorman-Rupp seems to be fairly priced at around 5.27% above our intrinsic value, which means if you buy Gorman-Rupp today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $34.08, then there isn’t really any room for the share price grow beyond what it’s currently trading. What's more, Gorman-Rupp’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Gorman-Rupp?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 66% over the next couple of years, the future seems bright for Gorman-Rupp. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in GRC’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on GRC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about Gorman-Rupp as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Gorman-Rupp, and understanding this should be part of your investment process.
If you are no longer interested in Gorman-Rupp, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
