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Gorman-Rupp Slips to Strong Sell on Weak Q4, Dim Prospects

Zacks Investment Research downgraded Gorman-Rupp Co. GRC to a Zacks Rank #5 (Strong Sell) on Apr 5, 2016. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market in the near term.

Why the Downgrade?

Market sentiments have been against Gorman-Rupp since the beginning of 2016 as evident from the 3.4% fall in the company’s share price to date. Also, the company’s financial performance in three out of four quarters of 2015 was disappointing. Average earnings surprise of the trailing four quarters was negative 14.81%.

In the fourth quarter, Gorman-Rupp’s earnings of 21 cents per share came in below the year-ago tally of 30 cents but managed to surpass the Zacks Consensus Estimate of 18 cents. Revenue declined 5.9% year over year due primarily to weak sales in non-water end markets.

For 2016, Gorman-Rupp anticipates weakness in the oil & gas market, adverse currency movements and unfavorable domestic weather conditions to thwart its growth. Disappointment over weak results and the soft outlook made investors cautious about the company’s prospects. Over the last 60 days, the Zacks Consensus Estimate for the stock slumped 16.7% to 75 cents for 2016 and stayed at 85 cents for 2017. For first-quarter 2016, the Zacks Consensus Estimate decreased 20% to 20 cents per share over the same time period.

Stocks to Consider
 
Gorman-Rupp Co. currently has a $671 million market capitalization. Some better-ranked stocks in the industry include Sun Hydraulics Corp. SNHY, Colfax Corporation CFX and Nordson Corporation NDSN. While Sun Hydraulics sports a Zacks Rank #1 (Strong Buy), Colfax and Nordson Corporation carry a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
NORDSON CORP (NDSN): Free Stock Analysis Report
 
SUN HYDRAULICS (SNHY): Free Stock Analysis Report
 
GORMAN RUPP CO (GRC): Free Stock Analysis Report
 
COLFAX CORP (CFX): Free Stock Analysis Report
 
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