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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