Breaking Down The Gorman-Rupp Company (GRC) Financial Health: Key Insights for Investors

If you're looking at The Gorman-Rupp Company (GRC) right now, you're seeing the classic industrial split-steady growth against a short-term earnings hiccup. Here's the quick math: Year-to-date (YTD) through September 30, 2025, the company delivered Net Sales of $515.8 million, a solid 3.8% increase from the prior year, which tells you the core business remains healthy due to pricing power and stable demand. But honestly, the market reacted to the Q3 2025 Net Income of just $11.3 million, or $0.43 per share, which fell short of expectations, largely due to a $3.0 million one-time facility optimization cost as they consolidated their National Pump Company footprint. The real opportunity is in the market drivers: YTD sales in the municipal sector are up $7.5 million, driven by infrastructure spending, plus the industrial market is up $5.9 million, defintely fueled by the insatiable demand from data center construction. The order book is the clearest indicator of near-term action: Q3 incoming orders jumped 19.2% to a robust $184.5 million, a clear sign that the recent stock dip has likely created a tactical buying opportunity.

Revenue Analysis

If you're looking at The Gorman-Rupp Company (GRC), the direct takeaway for 2025 is clear: revenue growth is steady, but the internal drivers are shifting. The company is successfully leveraging infrastructure spending and the data center boom to offset a slowdown in the construction market, which is smart business.

For the first nine months of 2025, GRC's net sales clocked in at $515.8 million, marking a year-over-year increase of 3.8% compared to the same period in 2024. That's a solid, if not spectacular, growth rate that tells me the core business of designing and manufacturing pumps and pump systems is defintely resilient. This is not explosive growth, but it's consistent, and consistency is king in industrial manufacturing.

Where the Growth is Coming From

The primary revenue streams for GRC are their diverse end-markets. What's critical is seeing where the money is moving. The YTD 2025 results show a clear pivot toward infrastructure-related spending and new industrial demand, which is a trend you need to watch closely.

Here's the quick math on the biggest year-to-date revenue increases through September 30, 2025, which highlight the new opportunities:

• Municipal Market: Up $7.5 million, driven by water and wastewater projects tied to increased infrastructure investment.
• Industrial Market: Up $5.9 million, largely fueled by increased demand related to data centers.
• Fire Suppression Market: Up $3.9 million, showing continued strength in safety and regulatory compliance applications.

But it's not all up. To be fair, the construction market saw a decrease of $4.6 million in sales, mainly due to a general slowdown in activity, including sales into the rental market. The agriculture market also saw a slight decrease of $0.2 million in the third quarter alone. This demonstrates the importance of GRC's market diversification-they are using growth in one area to cushion the impact of softness in another.

Segment Optimization and Future Margins

A significant change in the revenue structure isn't about what they sell, but how they sell it, specifically in the National Pump Company (NPC) footprint. GRC is actively optimizing this segment, reducing the number of NPC operating facilities from six to three. This is a smart move to lower fixed operating costs with minimal expected impact on sales volume.

This facility optimization is expected to generate annualized savings between $2.0 million and $2.5 million in payroll and facility costs. What this estimate hides is the one-time cost of $3.0 million in facility optimization costs recognized in the first nine months of 2025, which temporarily pressured operating margin. Still, the long-term benefit is a leaner cost structure that should improve profitability and bolster margins against fluctuating material costs in the future. You can read more about the broader financial picture in our full post: Breaking Down The Gorman-Rupp Company (GRC) Financial Health: Key Insights for Investors.

Profitability Metrics

You're looking for a clear picture of The Gorman-Rupp Company (GRC)'s financial engine, not just the top-line revenue. The direct takeaway is that GRC maintains a healthy gross margin, well within the industrial manufacturing sweet spot, but its operating and net margins in the latter half of 2025 were temporarily compressed by a strategic, one-time cost.

The company's year-to-date (YTD) gross profit margin for the first nine months of 2025 stood at a solid 30.4%. This places GRC squarely in the middle of the general manufacturing industry's average gross margin range of 25% - 35% for 2025. This shows their core ability to manage the cost of goods sold (COGS) and maintain pricing power, a critical factor for an industrial name.

Margin Trends and Operational Efficiency

While the YTD figure is strong, a quarter-by-quarter look reveals the impact of management's efficiency drive. In the third quarter of 2025 (Q3 2025), the gross margin dipped to 29.2%, down from 30.7% in Q1 2025. This wasn't a failure of pricing, but a planned hit: the Q3 gross profit of $50.4 million included $2.7 million in non-recurring facility optimization costs.

The operating margin (Operating Income $\div$ Net Sales)-a measure of operational efficiency before interest and taxes-followed a similar path, dropping to 12.4% in Q3 2025, down from 13.5% in Q1 2025. Here's the quick math: the Q3 operating income of $21.5 million absorbed $3.0 million in facility optimization costs, which is a significant, but non-core, expense. This is a temporary headwind, not a structural flaw.

• Gross Margin: 30.4% YTD 2025.
• Q3 Operating Margin: 12.4% (impacted by one-time costs).
• Net Income YTD: $39.3 million for nine months.

Management expects these facility optimization efforts to yield annualized savings between $2.0 million and $2.5 million in payroll and facility costs, so the short-term margin compression is a trade-off for future profitability.

Net Profitability and Industry Comparison

The net profit margin-your true bottom line-has shown a positive trend over the past year, expanding to 7.4% as of October 2025, up from 5.8% in the previous year. This expansion is a defintely encouraging sign of improved execution and better cost control outside of the one-time charges. For the first nine months of 2025, GRC reported a net income of $39.3 million.

To be fair, GRC's profitability stacks up well against comparable industrial sectors. For instance, the Aerospace & Defense sector, a proxy for high-value industrial manufacturing, shows an average gross margin of 28.8% and a net profit margin of 5.7% as of November 2025. GRC's YTD gross margin of 30.4% and trailing net margin of 7.4% both exceed these benchmarks, indicating a competitive and efficient operation.

You can see the quarterly margin fluctuations clearly in the table below, where the Q3 impact is most visible:

The key action item is to monitor Q4 2025 results for the expected rebound in margins as the one-time facility optimization costs fade and the anticipated $2.0 million to $2.5 million in annual savings begin to materialize. This deeper analysis is part of our broader discussion on Breaking Down The Gorman-Rupp Company (GRC) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You're looking at The Gorman-Rupp Company's (GRC) balance sheet to understand how they fund their operations, and the takeaway is clear: the company is conservatively financed, preferring a balanced approach but with a slight leaning toward debt compared to its peers. This isn't a red flag, but it's a point of focus for a capital-intensive industrial business.

As of the second quarter of 2025, The Gorman-Rupp Company (GRC) reported total debt of approximately $337.06 million, with the majority being long-term debt, net of the current portion, sitting at around $318.564 million. This significant debt load is balanced against its shareholder equity, which stood at roughly $405.16 million in the same period. This is a business that uses debt, but it's not over-leveraged.

Here's the quick math on their capital structure:

• Total Debt (Q2 2025): $337.06M
• Total Equity (Q2 2025): $405.16M
• Debt-to-Equity Ratio: 0.80

A Debt-to-Equity (D/E) ratio of 0.80 means the company uses 80 cents of debt for every dollar of equity to finance its assets. This is a healthy figure, but when you compare it to the 'Building Products & Equipment' industry average of approximately 0.67 as of November 2025, The Gorman-Rupp Company (GRC) is slightly more leveraged than its typical peer. To be fair, a higher D/E can often indicate management is effectively using debt to amplify returns on equity, but it also carries a higher interest rate risk.

The company has been proactive in managing its debt profile. In May 2024, they completed a significant refinancing, which included issuing $30.0 million of new 6.40% Senior Secured Notes due in 2031. This strategic move, along with their strong cash flow in 2025, allowed them to reduce total outstanding debt by a substantial $30.0 million in the first six months of 2025 alone. This reduction is defintely a positive sign for investors, as it contributed to a noticeable decrease in interest expense for the year. The market seems to appreciate this, with analysts maintaining a consensus 'Buy' rating on the stock as of late October 2025.

The Gorman-Rupp Company (GRC) balances financing by prioritizing debt reduction while consistently rewarding shareholders. They are a Dividend King, which means they've increased their dividend for over 50 consecutive years, a clear commitment to equity holders. This focus on both debt reduction and a stable, growing dividend shows a management team that is a trend-aware realist, actively de-risking the balance sheet while maintaining a core promise to investors. If you want to dive deeper into who is buying the stock, check out Exploring The Gorman-Rupp Company (GRC) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if The Gorman-Rupp Company (GRC) can cover its short-term bills, and honestly, the answer is a solid yes. As of the second quarter of 2025, the company maintains a healthy liquidity position, a clear sign of operational discipline and strong cash generation. This is exactly what you want to see in a mature industrial company.

The company's ability to meet its immediate obligations is measured by its current ratio (current assets divided by current liabilities) and quick ratio (acid-test ratio), which strips out less-liquid inventory. For The Gorman-Rupp Company (GRC), the current ratio stood at approximately 2.39x in the second quarter of 2025. Here's the quick math: current assets were about $231.3 million against current liabilities of $96.7 million. A ratio over 2.0x is generally excellent for manufacturing. The quick ratio, a tougher test, was around 1.39x, which is still very strong and suggests they don't rely solely on selling inventory to pay their near-term debts.

This strong position translates directly into a significant working capital balance (current assets minus current liabilities) of around $134.6 million in Q2 2025. This trend shows management is effectively balancing inventory needs with receivables, keeping a substantial buffer. It's a defintely positive sign for operational flexibility.

The cash flow statement confirms this liquidity strength, showing a robust trend of cash generation from core business activities. Look at the first half of 2025:

• Operating Cash Flow (CFO): Net cash from continuing operating activities was $21.1 million in Q1 2025 and climbed to $28 million in Q2 2025. This upward trend is a powerful indicator of fundamental business health.
• Investing Cash Flow (CFI): Capital expenditures (CapEx) were modest, at about $3.0 million in Q1 2025 and roughly $3 million in Q2 2025. The full-year 2025 CapEx is planned to be approximately $20.0 million, which is well-covered by the operating cash flow.
• Financing Cash Flow (CFF): The strong cash flow allowed the company to reduce total debt by $30 million in the first half of 2025, a clear sign of deleveraging and financial strength.

What this estimate hides is the potential for increased facility optimization costs, which are a near-term drag on margins but a long-term benefit to the cost structure. Still, the underlying cash flow is so strong that the company is generating positive free cash flow (FCF), with an FCF Margin of 13.9% in Q2 2025. This means they have plenty of cash left over after paying for operations and capital needs to pay down debt and support their dividend. The balance sheet is rock-solid. For a deeper dive into their long-term strategy, you should review their Mission Statement, Vision, & Core Values of The Gorman-Rupp Company (GRC).

Finance: Monitor Q4 2025 CapEx spending against the $20.0 million plan to ensure operational cash flow remains sufficient.

Valuation Analysis

You're looking at The Gorman-Rupp Company (GRC) and wondering if the market is giving you a fair shake on the price. The short answer is that, based on key metrics in November 2025, the stock appears to be trading at a slight premium to its intrinsic value, but analysts still see significant upside. It's a classic case of a quality industrial company commanding a higher multiple.

The core of the valuation story lies in its price multiples. For a steady, established industrial player like GRC, these ratios-Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA)-are your best compass. They tell you exactly what investors are willing to pay for a dollar of the company's earnings, assets, or cash flow.

• Price-to-Earnings (P/E): The trailing P/E ratio is sitting at approximately 23.55x as of November 2025. Here's the quick math: this is slightly below the broader US machinery sector average of 23.9x, but notably above an estimated fair P/E of 18.4x. This premium reflects market confidence in GRC's consistent profitability and recent dividend growth.
• Price-to-Book (P/B): The P/B ratio is 2.93x. This means the market values the company at nearly three times its net tangible assets (book value), which is a healthy premium and typical for a company with strong brand equity and a long operating history.
• Enterprise Value-to-EBITDA (EV/EBITDA): This metric, which is capital structure-neutral, is currently around 12.17x. This is a reasonable multiple for a company in the specialty industrial machinery space, indicating a valuation that aligns with steady, predictable cash flow generation.

The stock price trend over the last 12 months shows resilience, but it's not a runaway train. The stock has traded in a 52-week range between a low of $30.87 and a high of $49.25. As of November 2025, the stock is trading around $45.04, representing a modest gain of about 3.95% over the past year. That's a solid, if unspectacular, return for a mature industrial stock.

For income-focused investors, GRC remains a dividend aristocrat. The company pays an annual dividend of approximately $0.76 per share, translating to a dividend yield of roughly 1.70%. The payout ratio is conservative at about 39% of trailing earnings, which is defintely sustainable and suggests plenty of room for future dividend increases, a commitment you can read more about here: Mission Statement, Vision, & Core Values of The Gorman-Rupp Company (GRC).

The Wall Street consensus is decidedly bullish. Analysts currently rate GRC as a Buy or Strong Buy. The average 12-month price target is a compelling $59.00, which implies an upside potential of over 30% from the current price. This suggests that while current multiples look full, the Street is pricing in future earnings acceleration and market share gains.

Here is a quick summary of the key valuation metrics for your decision-making process:

So, is GRC overvalued or undervalued? It's 'fully valued' on current earnings but looks undervalued if you trust the analysts' projected growth and the $59.00 price target. The action is to watch for any dips closer to that estimated fair P/E of 18.4x as a better entry point, but don't ignore the strong consensus. Finance: monitor forward P/E estimates for any re-rating signals by the end of the year.

Risk Factors

You need to see past the strong headline numbers-like The Gorman-Rupp Company (GRC)'s $515.7 million in net sales for the first nine months of 2025-to the underlying risks. While GRC is a Dividend King (a company that has increased its dividend for 50+ consecutive years), its core business is cyclical and exposed to several near-term headwinds. You should focus on how the company manages market volatility and supply chain pressures, especially given its exposure to global trade policy.

The biggest external risk is the highly competitive nature of the pump and pump systems market, which, combined with the volatility of raw material and labor costs, can pressure gross margins. For the first six months of 2025, GRC's gross margin was 31.0%, a slight dip from 31.2% in the same period in 2024, partly due to increased LIFO (Last-In, First-Out) inventory expense. This tells you that cost management is a constant fight.

Internal and external risks are always a factor, but a few stand out in GRC's recent filings. The company's reliance on specific, cyclical markets is a clear operational risk. For example, in the first quarter of 2025, GRC saw sales declines in the construction, agriculture, and industrial markets, which were only partially offset by strength in the municipal and repair sectors.

Here are the primary risks you should be tracking:

• Market Volatility: Declines in construction and agriculture sales, which can swing wildly.
• Supply Chain & Tariffs: Availability and costs of raw materials and labor, plus the impact of U.S. trade policy and resulting tariffs.
• Financial Structure: The company's level of indebtedness, though they are actively managing it.
• Personnel & IP: Loss of key personnel and the security of intellectual property.

The strategic risk related to the company's debt is being actively mitigated, which is a positive sign. The Gorman-Rupp Company slashed $30 million off its debt load in the first half of 2025 alone, reducing interest expenses from $9 million to $6 million. This move fortifies the balance sheet against a high-interest-rate environment. That's defintely a smart, proactive financial move.

To combat external pressures like tariffs (a general risk), the company has a clear mitigation strategy. They are leveraging their domestic supply chain and proactively implementing selling price increases to offset potential cost hikes from global trade policy. This domestic focus is a critical competitive advantage (a moat, if you will) in a world facing supply chain chaos.

For a deeper dive into GRC's valuation and strategic positioning, read the full post: Breaking Down The Gorman-Rupp Company (GRC) Financial Health: Key Insights for Investors.

You should also be aware of the operational changes. The third quarter of 2025 operating income of $21.5 million included $3.0 million in facility optimization costs, a non-recurring item that temporarily compressed the operating margin to 12.4%. This is a short-term hit for long-term efficiency, but it shows up as a risk in the near-term financials.

Here is a quick summary of key risk-related financial data from the first nine months of 2025:

Growth Opportunities

You are looking for a clear map of where The Gorman-Rupp Company (GRC) is headed, and the path is paved by public infrastructure spending and the massive build-out of data centers. The company's near-term growth is not about a massive, risky acquisition, but rather disciplined capital management and capitalizing on two very strong, secular demand cycles.

The company is positioned for steady, profitable expansion, with analysts forecasting 2025 full-year earnings to hit approximately $53,286,136, reflecting a projected annual earnings growth rate of 10.42%. Here's the quick math: that earnings growth significantly outpaces the projected annual revenue growth rate of 2.8%, which suggests management is focused on margin improvement and cost control, not just top-line volume.

Key Growth Drivers and Revenue Projections

The Gorman-Rupp Company's growth engine in 2025 is clearly tied to two major market segments: municipal infrastructure and the industrial data center boom. This is a classic example of a diversified industrial company executing well on market trends.

The municipal market, driven by U.S. government infrastructure spending, is fueling strong demand for flood control and stormwater management pumps. This focus is a stable, long-term revenue stream. Also, the surge in data center construction is boosting sales in the industrial market, a trend that accelerated through the first nine months of 2025.

The company's net sales for the first nine months of 2025 were $515.8 million, an increase of 3.8% year-over-year. This performance, combined with a robust backlog of orders totaling $234.2 million as of September 30, 2025, provides excellent visibility into future revenue streams.

• Municipal market sales increased by $7.5 million.
• Industrial market sales, driven by data centers, rose by $5.9 million.
• Fire suppression market sales saw a jump of $3.9 million.

Strategic Initiatives and Competitive Edge

The management team is taking clear, actionable steps to improve the margin profile and strengthen the balance sheet, which is crucial in a higher-rate environment. In the first half of 2025, GRC strategically reduced its total debt by $30 million, which immediately lowered interest expenses and improved financial resilience.

They also completed a facility optimization, reducing the National Pump Company (NPC) footprint from six operating facilities to three. This move is expected to generate annualized savings between $2.0 million and $2.5 million in payroll and facility costs, showing a disciplined approach to enhancing profitability. This is smart, focused operational leverage.

The company's primary competitive advantage is its reputation for reliable, durable equipment and a predominantly U.S.-based supply chain. This domestic focus helps mitigate the impact of global tariffs and supply chain volatility, ensuring better parts availability and field service for customers. This is a critical factor for municipal and industrial clients where uptime is non-negotiable. For a deeper dive into the valuation, you can check out the full analysis at Breaking Down The Gorman-Rupp Company (GRC) Financial Health: Key Insights for Investors.

The defintely clear takeaway is that GRC is not chasing speculative growth; it's maximizing returns from its core markets while systematically cutting costs and strengthening its balance sheet. Your next step should be to model the impact of the $2.0 million to $2.5 million in expected annual savings on the 2026 earnings per share (EPS) forecast. Owner: Analyst Team.