Value
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.3 |
| P/S | 8.1 |
| EV/EBITDA | 0.5 |
| Fwd P/E | 4.4 |
| PEG | 4.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 28.1x
- ▸PEG: 2.49
GRC · Why this verdict
Why Gorman-Rupp Company (The) (GRC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock is trading above the 200-day moving average with rising on-balance volume and a bullish MACD configuration, indicating broad participation in the advance and a constructive underlying trend that has driven price to within 1.4% of its 52-week high. Momentum breakdown | Price holds above the 200-day moving average and on-balance volume continues rising for 3 additional months, confirming the uptrend remains intact. | →Stable |
| CounterRSI at 76 is in overbought territory, and the stock has already exceeded its analyst consensus target—both conditions historically associated with near-term mean reversion rather than continued momentum, particularly when earnings estimates are moving lower. | ||
At a forward price-to-earnings multiple of 28.9x and a PEG ratio of 2.53, the stock is priced well above average for an industrial machinery business, at the same time that earnings estimates are drifting lower—creating a double-risk of both multiple compression and earnings revision headwinds. Value | Forward earnings multiple compresses below 22x as either price pulls back or estimates are revised upward, restoring a more defensible valuation anchor. | →Stable |
| CounterA premium multiple can persist when a company is consistently beating and raising; the three most recent quarterly earnings beats (including two large beats above 27% and 38% surprise) suggest analysts may be anchoring estimates too conservatively, which could result in upward revisions rather than further deterioration. | ||
The company has achieved a Piotroski financial health score of 9 out of 9—indicating strong balance sheet, profitability, and operating efficiency metrics across all evaluated dimensions—combined with above-average free cash flow quality, providing a durable foundation for the business regardless of near-term price action. Quality | Financial health metrics are maintained at or above current levels over the next 4 reported quarters, with no deterioration in profitability or cash conversion ratios. | →Stable |
| CounterThe Piotroski score is a backward-looking snapshot; current ratio and liquidity components at the maximum do not protect against a cyclical revenue decline, and the below-average gross margin suggests the cost structure may be sensitive to volume or input price headwinds. | ||
The stock has moved above its near-term take-profit target at $84.85, with the current price of $85.40 leaving approximately -0.6% of headroom—meaning the stock has already priced in the near-term upside and the risk/reward of approximately -0.11-to-1 is unfavorable for new buyers. Price targets | Price falls back below $78, restoring at least 8% of potential upside to the prior resistance level and resetting the reward/risk geometry to favorable. | →Stable |
| CounterA stock that breaks and holds above its technical target can establish a new, higher equilibrium; if the next earnings print beats meaningfully, analysts may revise consensus upward and create fresh upside potential without the stock needing to pull back. | ||
Forward earnings estimates are trending downward—a signal that the analyst community expects business conditions to moderate—which, combined with a premium valuation multiple, means the stock is becoming progressively more expensive on a forward basis even as estimates erode. Bear case | Earnings estimate revisions turn positive (upward) over the next 2 months, with at least 2 analyst upgrades or estimate increases restoring positive estimate momentum. | →Stable |
| CounterEstimate drift can reverse sharply after a strong earnings print; the company's three most recent quarterly beats include a 38.8% surprise in the most recent quarter, suggesting management guidance may be running conservatively and the next print could trigger upward revisions. | ||
The stock is trading above the 200-day moving average with rising on-balance volume and a bullish MACD configuration, indicating broad participation in the advance and a constructive underlying trend that has driven price to within 1.4% of its 52-week high.
→StableMomentum breakdown
- Expectation
- Price holds above the 200-day moving average and on-balance volume continues rising for 3 additional months, confirming the uptrend remains intact.
CounterRSI at 76 is in overbought territory, and the stock has already exceeded its analyst consensus target—both conditions historically associated with near-term mean reversion rather than continued momentum, particularly when earnings estimates are moving lower.
At a forward price-to-earnings multiple of 28.9x and a PEG ratio of 2.53, the stock is priced well above average for an industrial machinery business, at the same time that earnings estimates are drifting lower—creating a double-risk of both multiple compression and earnings revision headwinds.
→StableValue
- Expectation
- Forward earnings multiple compresses below 22x as either price pulls back or estimates are revised upward, restoring a more defensible valuation anchor.
CounterA premium multiple can persist when a company is consistently beating and raising; the three most recent quarterly earnings beats (including two large beats above 27% and 38% surprise) suggest analysts may be anchoring estimates too conservatively, which could result in upward revisions rather than further deterioration.
The company has achieved a Piotroski financial health score of 9 out of 9—indicating strong balance sheet, profitability, and operating efficiency metrics across all evaluated dimensions—combined with above-average free cash flow quality, providing a durable foundation for the business regardless of near-term price action.
→StableQuality
- Expectation
- Financial health metrics are maintained at or above current levels over the next 4 reported quarters, with no deterioration in profitability or cash conversion ratios.
CounterThe Piotroski score is a backward-looking snapshot; current ratio and liquidity components at the maximum do not protect against a cyclical revenue decline, and the below-average gross margin suggests the cost structure may be sensitive to volume or input price headwinds.
The stock has moved above its near-term take-profit target at $84.85, with the current price of $85.40 leaving approximately -0.6% of headroom—meaning the stock has already priced in the near-term upside and the risk/reward of approximately -0.11-to-1 is unfavorable for new buyers.
→StablePrice targets
- Expectation
- Price falls back below $78, restoring at least 8% of potential upside to the prior resistance level and resetting the reward/risk geometry to favorable.
CounterA stock that breaks and holds above its technical target can establish a new, higher equilibrium; if the next earnings print beats meaningfully, analysts may revise consensus upward and create fresh upside potential without the stock needing to pull back.
Forward earnings estimates are trending downward—a signal that the analyst community expects business conditions to moderate—which, combined with a premium valuation multiple, means the stock is becoming progressively more expensive on a forward basis even as estimates erode.
→StableBear case
- Expectation
- Earnings estimate revisions turn positive (upward) over the next 2 months, with at least 2 analyst upgrades or estimate increases restoring positive estimate momentum.
CounterEstimate drift can reverse sharply after a strong earnings print; the company's three most recent quarterly beats include a 38.8% surprise in the most recent quarter, suggesting management guidance may be running conservatively and the next print could trigger upward revisions.
TrendMatrix Research · core thesis
Engine thesis — one sentence
A financially sound specialty industrial machinery company with strong momentum—RSI at 76, rising on-balance volume, and a near-perfect financial health score—has moved above its analyst consensus target with effectively no positive headroom remaining, while earnings estimates are drifting lower and a 28.9x forward earnings multiple prices in a growth trajectory the current estimate revisions do not support.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.8 |
| ROA | 4.9 |
| Gross margin | 2.3 |
| Op margin | 6.1 |
| Net margin | 4.2 |
| Current ratio | 9.8 |
| FCF quality | 7.4 |
| Moat | 5.5 |
| Piotroski F | 10.0 |
- ▸Strong Piotroski F-Score: 9/9
Growth
7.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.4 |
| EPS growth | 10.0 |
Momentum
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 5.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.1 |
| Price target | 3.4 |
| erm sentiment | 3.1 |
- ▸Light analyst coverage (3.0) — signal dampened
- ▸Below analyst target
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.7 |
| quality rank | 5.2 |
| growth rank | 4.3 |
Technical
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.5 |
| support resistance | 5.4 |
| 52w position | 8.1 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.8 |
| days to cover | 6.2 |
| volatility | 2.9 |
| put call | 7.8 |
| implied vol | 2.6 |
| beta | 5.9 |
| debt equity | 6.9 |
- ▸High IV: 64%
Catalyst
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.2 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 90.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:20d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.5<4.5
- ASYMMETRY:-2.7=NEGATIVE
Warning (0)
none
Reward-to-Risk
-2.71
Upside
-24.2%
Downside
8.9%
Sizing output
AVOID
SetupRange Bound — RSI 52 mid-range, Bollinger mid-band
EdgeCatalyst-Driven — Earnings in 20d with 3/4 beat streak
SuitabilityAggressive — MCap $2.2B<$5B
Investment implication
The F-path SELL output reflects an overall score of 5.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.5<4.5, ASYMMETRY:-2.7=NEGATIVE) reinforce the read. Current asymmetry R:R is -2.71 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.2, Technical at 6.3, and Quality at 6.1; the weakest are Peer rank at 3.5, Momentum at 3.5, and Value at 3.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -2.71 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Technical Momentum
Trip ifRSI falls below 50 and price crosses below the 200-day moving average for 2 consecutive weeks, invalidating the positive momentum thesis.
- P2Rich Valuation With Declining Estimates
Trip ifForward P/E multiple compresses below 22x, removing the expensive-valuation concern by bringing the stock back to a more defensible multiple.
- P3High Quality Financial Profile
Trip ifPiotroski F-score falls below 6 for 2 consecutive reported quarters, indicating meaningful deterioration in financial health quality.
- P4Stock Above Consensus Target
Trip ifAnalyst consensus price target revises upward above $100, restoring at least 17% potential upside from the current price and creating favorable reward/risk for new entry.
- P5Earnings Estimates Drifting Lower
Trip ifAnalyst EPS estimate revisions for the next reported quarter turn positive for at least 3 consecutive weeks, ending the downward drift in forward estimates.