Financial Analysis: Graco (GGG) versus Franklin Electric Co. (FELE)

Graco (NYSE: GGG) and Franklin Electric Co. (NASDAQ:FELE) are both industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Institutional & Insider Ownership

90.1% of Graco shares are held by institutional investors. Comparatively, 77.7% of Franklin Electric Co. shares are held by institutional investors. 5.7% of Graco shares are held by company insiders. Comparatively, 2.5% of Franklin Electric Co. shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Graco and Franklin Electric Co.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Graco 6.50% 40.21% 18.93%
Franklin Electric Co. 8.62% 13.10% 7.72%

Dividends

Graco pays an annual dividend of $1.44 per share and has a dividend yield of 1.3%. Franklin Electric Co. pays an annual dividend of $0.43 per share and has a dividend yield of 1.1%. Graco pays out 92.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin Electric Co. pays out 23.4% of its earnings in the form of a dividend. Graco has increased its dividend for 7 consecutive years and Franklin Electric Co. has increased its dividend for 12 consecutive years.

Volatility & Risk

Graco has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500. Comparatively, Franklin Electric Co. has a beta of 1.6, indicating that its share price is 60% more volatile than the S&P 500.

Valuation and Earnings

This table compares Graco and Franklin Electric Co.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Graco $1.40 billion 4.49 $397.35 million $1.55 72.50
Franklin Electric Co. $1.00 billion 1.79 $146.27 million $1.84 20.95

Graco has higher revenue and earnings than Franklin Electric Co.. Franklin Electric Co. is trading at a lower price-to-earnings ratio than Graco, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations for Graco and Franklin Electric Co., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Graco 0 4 0 0 2.00
Franklin Electric Co. 0 0 1 0 3.00

Graco presently has a consensus price target of $101.00, suggesting a potential downside of 10.12%. Franklin Electric Co. has a consensus price target of $52.00, suggesting a potential upside of 34.89%. Given Franklin Electric Co.’s stronger consensus rating and higher probable upside, analysts plainly believe Franklin Electric Co. is more favorable than Graco.

Summary

Graco beats Franklin Electric Co. on 9 of the 17 factors compared between the two stocks.

Graco Company Profile

Graco Inc. designs, manufactures and markets systems and equipment used to move, measure, control, dispense and spray fluid and powder materials. The Company specializes in equipment for applications that involve materials with viscosities, materials with abrasive or corrosive properties, and multiple-component materials that require ratio control. The Company operates through three segments: Industrial, Process and Contractor. The Industrial segment markets equipment and pre-engineered packages for moving and applying paints, coatings, sealants, adhesives and other fluids. The Process segment markets pumps, valves, meters and accessories to move and dispense chemicals, oil and natural gas, water, wastewater, petroleum, food, lubricants and other fluids. The Contractor segment markets sprayers for architectural coatings for painting, corrosion control, texture and line striping. Its equipment is used in the manufacturing, processing, construction and maintenance industries.

Franklin Electric Co. Company Profile

Franklin Electric Co., Inc. designs, manufactures and distributes water and fuel pumping systems, consisting of submersible motors, pumps, electronic controls and related parts and equipment. Its segments include Water Systems segment, the Fueling Systems segment and Other. Its Water Systems segment is engaged in the production and marketing of water pumping systems and offers motors, pumps, drives, electronic controls and monitoring devices. It also designs, manufactures and sells motors, pumps, electronic controls and related parts and equipment for use in groundwater, wastewater and fuel transfer applications. Its Fueling Systems is engaged in the production and marketing of fuel pumping systems, fuel containment systems, and monitoring and control systems. It also designs, manufactures and sells pumps, pipe, sumps, fittings, vapor recovery components, electronic controls, monitoring devices and related parts and equipment for use in submersible fueling system applications.

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