Franklin Electric's Current Valuation Keeps This Analyst Patient; Seeks Better Entry Point

Oppenheimer analyst Bryan F. Blair initiated coverage on Franklin Electric Co Inc FELE with Perform rating.
The analyst commends the company's fast-growing water treatment platform, extensive groundwater installed base, optionality in grid monitoring and switchgear technologies, and strong balance sheet.
Blair is bullish on FELE's overall franchise quality and strong growth momentum going forward.
Given competitors' different strategies, the analyst sees FELE's core focus on groundwater as a key differentiator. He considers the water treatment business (approaching sales of $200 million), a relatively new platform for FELE, an attractive long term growth opportunity.
The analyst is cautious about the earlier-than-expected decline in Fueling Systems revenue on accelerating EV adoption.
Blair expects EPS of $4.17 in 2023 (vs company guidance of $4.10–4.30) and $4.45 in 2024.
Price Action: FELE shares are trading lower by 0.58% to $88.88 on the last check Wednesday.

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