Gorman-Rupp (NYSE: GRC) and Flowserve (NYSE:FLS) are both industrial products companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, analyst recommendations, profitability and institutional ownership.

Analyst Ratings

This is a summary of current ratings and price targets for Gorman-Rupp and Flowserve, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gorman-Rupp 0 0 0 0 N/A
Flowserve 1 8 5 0 2.29

Flowserve has a consensus target price of $44.10, indicating a potential upside of 4.90%. Given Flowserve’s higher probable upside, analysts plainly believe Flowserve is more favorable than Gorman-Rupp.

Volatility and Risk

Gorman-Rupp has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500. Comparatively, Flowserve has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500.

Insider & Institutional Ownership

52.8% of Gorman-Rupp shares are held by institutional investors. 12.4% of Gorman-Rupp shares are held by insiders. Comparatively, 0.5% of Flowserve shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Gorman-Rupp pays an annual dividend of $0.50 per share and has a dividend yield of 1.6%. Flowserve pays an annual dividend of $0.76 per share and has a dividend yield of 1.8%. Gorman-Rupp pays out 55.6% of its earnings in the form of a dividend. Flowserve pays out 58.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Gorman-Rupp has increased its dividend for 10 consecutive years and Flowserve has increased its dividend for 44 consecutive years. Flowserve is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Gorman-Rupp and Flowserve’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gorman-Rupp 6.25% 9.72% 7.75%
Flowserve 4.58% 12.09% 4.33%

Earnings and Valuation

This table compares Gorman-Rupp and Flowserve’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gorman-Rupp $382.07 million 2.18 $24.88 million $0.90 35.43
Flowserve $3.99 billion 1.38 $132.45 million $1.29 32.59

Flowserve has higher revenue and earnings than Gorman-Rupp. Flowserve is trading at a lower price-to-earnings ratio than Gorman-Rupp, indicating that it is currently the more affordable of the two stocks.

Summary

Flowserve beats Gorman-Rupp on 9 of the 16 factors compared between the two stocks.

About Gorman-Rupp

The Gorman-Rupp Company designs, manufactures and sells pumps and pump systems. The Company offers its products for use in dewatering; petroleum original equipment; agriculture; fire protection; heating, ventilating and air conditioning; military, and other liquid-handling applications. The Company operates in the manufacture and international sale of pumps and pump systems segment. The Company produces various types of pumps, which include self-priming centrifugal, standard centrifugal, magnetic drive centrifugal, axial and mixed flow, vertical turbine line shaft, submersible, high pressure booster, rotary gear, diaphragm, bellows and oscillating. Its larger pumps are sold for use in the construction, industrial, water and wastewater handling fields; for flood control; for improving low residential water pressure, and for pumping refined petroleum products, including the ground refueling of aircraft, and for various agricultural purposes.

About Flowserve

Flowserve Corporation is a manufacturer and aftermarket service provider of flow control systems. The Company’s segments include Engineered Product Division, Industrial Product Division and Flow Control Division. Its geographic segments include North America, Europe, Asia Pacific, Middle East and Africa, and Latin America. It develops and manufactures precision-engineered flow control equipment integral to the movement, control and protection of the flow of materials in its customer’s critical processes. Its product portfolio of pumps, valves, seals, automation and aftermarket services supports infrastructure industries, including oil and gas, chemical, power generation and water management. It offers aftermarket equipment services, such as installation, diagnostics, repair and retrofitting through manufacturing platform and network of Quick Response Centers. Its products include oil and gas, general industries, chemical, power generation and water management.

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