The Gorman-Rupp Company (NYSE:GRC), might not be a large cap stock, but it saw a decent share price growth of 13% on the NYSE over the last few months. The company is inching closer to its yearly highs following the recent share price climb. Less-covered, small caps sees 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 take a look at Gorman-Rupp's outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Gorman-Rupp Still Cheap?
According to our valuation model, Gorman-Rupp seems to be fairly priced at around 0.52% 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 $36.49, then there isn't really any room for the share price grow beyond what it's currently trading. Furthermore, Gorman-Rupp's low beta implies that the stock is less volatile than the wider market.
Can we expect growth from Gorman-Rupp?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 39% 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? GRC's optimistic future growth appears to have been factored into the current share price, 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 confidence to invest in the company should the price drop below its fair 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. While conducting our analysis, we found that Gorman-Rupp has 1 warning sign and it would be unwise to ignore it.
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.