Dividend Kings in Focus: The Gorman-Rupp Company

Up to date on July eighth, 2025 by Felix Martinez

In 2022, The Gorman-Rupp Firm (GRC) introduced that it was growing its quarterly dividend for the fiftieth consecutive yr.

Because of this, it turned a member of the Dividend Kings. The Dividend Kings are a bunch of simply 55 shares which have raised their dividends for at least 50 straight years.

This group is amongst our favorites for buyers. That’s as a result of their high-quality enterprise fashions, which have enabled dividend progress for many years, are more likely to proceed doing so sooner or later.

With this in thoughts, we created a full record of all 55 Dividend Kings.

You may obtain the total record, together with necessary monetary metrics reminiscent of dividend yields and price-to-earnings ratios, by clicking on the hyperlink beneath:

This text will study Gorman-Rupp’s enterprise overview, progress prospects, aggressive benefits, and anticipated returns for the subsequent 5 years.

Enterprise Overview

Gorman-Rupp has been in enterprise since 1933. The corporate started as a producer of pumps and pumping methods and has advanced into a number one provider of essential methods that industrial purchasers depend on to run their companies.

The corporate generates income exceeding $660 million yearly and has a market capitalization of $996 million.

Regardless of its measurement, Gorman-Rupp is a key cog for a lot of industrial prospects. Its merchandise are utilized in all kinds of finish markets, together with agriculture, air-con, building, hearth safety, heating, industrial, liquid dealing with, army, unique gear, petroleum, air flow, water, and wastewater.

Supply: Investor Presentation

The corporate’s water-related companies account for over half of its annual income, non-water-related companies contribute roughly 30%, and restore components account for the rest.

The Gorman-Rupp Firm reported Q1 2025 internet revenue of $12.1 million ($0.46 per share), up 53.8% from $7.9 million ($0.30 per share) in Q1 2024. Web gross sales grew 2.9% to $163.9 million from $159.3 million, pushed by will increase in municipal ($1.8 million), restore ($3.2 million), OEM ($2.5 million), petroleum ($1.0 million), and hearth suppression ($0.7 million) markets, although offset by declines in building ($2.7 million), agriculture ($0.9 million), and industrial ($0.9 million) markets. Adjusted EBITDA rose 5.3% to $29.7 million, with working revenue up 8.3% to $22.1 million and an working margin of 13.5% (up 70 foundation factors), fueled by pricing beneficial properties and SG&A leverage.

Gross revenue elevated 4.0% to $50.3 million, with a gross margin of 30.7% (up 30 foundation factors). SG&A bills have been $25.1 million (15.3% of gross sales), barely up from $24.9 million. Curiosity expense decreased 38.5% to $6.2 million, primarily as a result of refinancing and a $14.6 million discount in debt to $352.2 million. Working money move doubled to $21.1 million from $10.7 million. Capital expenditures totaled $3.0 million, with a full-year plan of $20.0 million. The order backlog was $217.8 million, down from $234.2 million in Q1 2024 however up from $206.0 million at year-end 2024.

CEO Scott A. King emphasised the sturdy demand for flood management and stormwater administration from municipalities, driving gross sales and backlog progress. The U.S.-based provide chain is anticipated to mitigate the impacts of tariffs by means of pricing changes. Whereas no particular 2025 steering was supplied, Gorman-Rupp stays optimistic about attaining worthwhile progress, supported by a $0.185 per share dividend and share repurchases, which mirror confidence in its monetary and operational power.

Development Prospects

Gorman-Rupp’s position in its trade is essential, as the corporate’s merchandise are important for these finish markets to carry out their fundamental features. This makes this comparatively small firm an important a part of the economic sector.

That stated, the corporate’s long-term earnings progress is commonly correlated with the well being of the financial system. Earnings volatility has been a priority, as income can fluctuate considerably from yr to yr.

The corporate has been very efficient at managing prices, which has enabled secure margins during the last decade; nonetheless, there have been intervals of weak point.

One issue working in Gorman-Rupp’s favor is the getting old infrastructure that plagues its essential market of the U.S. The American Society of Civil Engineers charges the nation’s infrastructure as poor.

General, the getting old infrastructure system receives a C- from the group, with significantly poor grades for consuming water, wastewater, and stormwater methods.

It’s estimated that $2.6 trillion shall be required to be spent over the subsequent decade to repair and enhance water, wastewater, and flood management methods, assembly the necessity for infrastructure enhancements. This could have Gorman-Rupp well-positioned for years to return.

One other method Gorman-Rupp makes an attempt to reinforce its natural progress is thru strategic acquisitions.

An excellent instance of this was the beforehand mentioned Fill-Ceremony buy. Utilizing money readily available and new debt, Gorman-Rupp paid $525 million for Fill-Ceremony, which was previously a division of Tuthill Company.

Fill-Ceremony’s portfolio contains high-performance liquid switch pumps, mechanical and digital meters, precision weights, hoses, nozzles, and a spread of equipment.

The addition of Fill-Ceremony was made potential as a result of Gorman-Rupp’s stability sheet is in remarkably fine condition even after issuing new debt to fund the acquisition.

Earlier than this acquisition, the corporate had zero long-term debt on its stability sheet. Debt has elevated, however stays manageable given the numerous influence Fill-Ceremony has already had on outcomes.

Aggressive Benefits and Recession Efficiency

Gorman-Rupp has turn out to be an trade chief, largely, as a result of its potential to supply a wide range of merchandise to fulfill the wants of various finish markets. The corporate’s diversified portfolio helps shield towards declines in anybody space of its enterprise.

Fireplace Suppression is probably the most vital contributor to gross sales, however this accounts for less than round a fifth of the full income that Gorman-Rupp generates annually.

This diversification might help alleviate declines in a sure space.

Nevertheless, Gorman-Rupp isn’t resistant to the impacts of a recession. Listed beneath are the corporate’s earnings-per-share totals throughout and after the Nice Recession:

2008 earnings-per-share: $1.04 (24% lower)
2009 earnings-per-share: $0.70 (33% lower)
2010 earnings-per-share: $0.93 (33% enhance)
2011 earnings-per-share: $1.10 (18% enhance)

Gorman-Rupp suffered vital declines throughout the Nice Recession. The corporate skilled a rebound shortly after this era, because the financial system started to recuperate and demand improved. The corporate established a brand new excessive for earnings per share shortly after the downturn.

On the similar time, the corporate continued to extend its dividend, simply because it had for many years.

Whereas enterprise outcomes are more likely to undergo throughout the subsequent financial downturn, we imagine that the tailwinds supporting the corporate’s enterprise mannequin will allow continued dividend progress.

Supply: Investor Presentation

Valuation and Anticipated Returns

Shares of Gorman-Rupp are buying and selling at 18.2 instances our anticipated 2025 earnings per share of $2.10. We imagine that honest worth lies nearer to 23 instances earnings, which implies an increasing P/E may improve annual returns by roughly 4.9% per yr over the subsequent 5 years.

Between natural progress and the power so as to add key companies to its portfolio, we forecast that Gorman-Rupp can obtain a median annual earnings-per-share progress of 6% by means of 2030.

The dividend can even add to the inventory efficiency. Presently, Gorman-Rupp is yielding 1.9%, which tops the 1.2% common yield of the S&P 500 Index.

Due to this fact, Gorman-Rupp is projected to return 12.8% per yr on common by means of 2030. Nevertheless, we predict the inventory is a Maintain in our view.

Closing Ideas

The Dividend Kings are an unique record of firms which have established extraordinarily lengthy histories of dividend progress.

This feat is so uncommon that there are simply 55 firms that meet the lone requirement of not less than 5 a long time of dividend progress.

Gorman-Rupp is a comparatively new addition to this record. The corporate’s spectacular enterprise mannequin, potential to make strategic acquisitions, and favorable trade tailwinds ought to place it to proceed rising its dividend.

The inventory can also be fairly priced and has double-digit whole return potential over the subsequent 5 years, incomes Gorman-Rupp a maintain suggestion.