Gorman-Rupp a Stock Worth Buying - Analyst Blog

Zacks Investment Research upgraded Gorman-Rupp Co. GRC to a Zacks Rank #1 (Strong Buy) on Apr 29, 2014. Going by the Zacks model, companies holding a Zacks Rank #1 have strong chances of performing better than the broader market.

Why the Upgrade?

Gorman-Rupp kept its earnings beat streak alive in first-quarter 2014, while posting a positive earnings surprise of 35.71%. The company's average positive earnings surprise for the trailing four quarters is 21.17%. A brief discussion of first-quarter 2014 results is provided below:

Earnings per share in the quarter were 38 cents, up from 26 cents recorded in the year-ago quarter and way above the Zacks Consensus Estimate of 28 cents. Sales grew 19% to $110 million on the back of healthy performance in the domestic as well as international markets. Gross margin grew by 200 basis points year over year.   

Gorman-Rupp's stellar performance in the quarter induced positive reactions as evidenced by a hike in earnings estimates. In the last 7 days, the Zacks Consensus Estimate has increased by 9.4% to $1.52 for 2014 and by 6.3% to $1.69 for 2015 ??? representing year-over-year growth of 21.6% for 2014 and 11.2% for 2015.

In the next 5 years, Gorman-Rupp promises solid earnings growth to the tune of 10% as against 7.4% recorded in the past 5 years. In the near term, the Earnings ESP for second-quarter 2014 is 0.0% while it is +2.5% for the third quarter.

Other Stocks to Consider

Gorman-Rupp presently has a market capitalization of $794 million. Other companies worth considering in the industry include The Babcock & Wilcox Co. BWC, Illinois Tool Works Inc. ITW and Broadwind Energy, Inc. BWEN, all carrying a Zacks Rank #2 (Buy).