Franklin Electric Co Inc

FELE

Motors & Generators

Mkt Cap

$4.518B

PE

24.00

Debt

$136.2M

Cash

$65.31M

EV

$4.589B

FCF

$285.3M

Market Cap

$4.518B

P/E Ratio

24.00

Debt

$136.2M

Cash

$65.31M

EV

$4.589B

FCF

$285.3M

Charts data: {"Earnings":[{"time":"2015-01-02","value":68200000},{"time":"2016-01-01","value":71400000},{"time":"2016-12-30","value":77000000},{"time":"2017-12-30","value":77600000},{"time":"2018-12-30","value":105100000},{"time":"2019-12-30","value":94800000},{"time":"2020-12-30","value":99800000},{"time":"2021-12-30","value":153000000},{"time":"2022-12-30","value":186600000},{"time":"2023-12-30","value":192600000}],"Sales":[{"time":"2015-01-02","value":1047777000},{"time":"2016-01-01","value":924923000},{"time":"2016-12-30","value":949856000},{"time":"2017-12-30","value":1124909000},{"time":"2018-12-30","value":1298129000},{"time":"2019-12-30","value":1314578000},{"time":"2020-12-30","value":1247331000},{"time":"2021-12-30","value":1661865000},{"time":"2022-12-30","value":2043711000},{"time":"2023-12-30","value":2065133000}],"Net Margins":[{"time":"2015-01-02","value":0.06509018617511168},{"time":"2016-01-01","value":0.07719561520256281},{"time":"2016-12-30","value":0.0810649193140855},{"time":"2017-12-30","value":0.0689833577649392},{"time":"2018-12-30","value":0.08096267782323636},{"time":"2019-12-30","value":0.0721143971677603},{"time":"2020-12-30","value":0.08001083914373971},{"time":"2021-12-30","value":0.09206523995631415},{"time":"2022-12-30","value":0.09130449461787894},{"time":"2023-12-30","value":0.0932627583792424}],"Assets":[{"time":"2015-01-02","value":1075887000},{"time":"2016-01-01","value":996408000},{"time":"2016-12-30","value":1039905000},{"time":"2017-12-30","value":1185353000},{"time":"2018-12-30","value":1182365000},{"time":"2019-12-30","value":1194743000},{"time":"2020-12-30","value":1272307000},{"time":"2021-12-30","value":1575165000},{"time":"2022-12-30","value":1694201000},{"time":"2023-12-30","value":1728122000}],"Stockholders Equity":[{"time":"2015-01-02","value":598983000},{"time":"2016-01-01","value":559465000},{"time":"2016-12-30","value":615088000},{"time":"2017-12-30","value":702621000},{"time":"2018-12-30","value":735827000},{"time":"2019-12-30","value":798669000},{"time":"2020-12-30","value":849949000},{"time":"2021-12-30","value":948662000},{"time":"2022-12-30","value":1070134000},{"time":"2023-12-30","value":1209148000}],"ROE":[{"time":"2015-01-02","value":0.11385965878831286},{"time":"2016-01-01","value":0.12762192451717266},{"time":"2016-12-30","value":0.12518533933355877},{"time":"2017-12-30","value":0.11044361042439665},{"time":"2018-12-30","value":0.1428324864404269},{"time":"2019-12-30","value":0.11869748293723682},{"time":"2020-12-30","value":0.11741880983447242},{"time":"2021-12-30","value":0.16127978141846094},{"time":"2022-12-30","value":0.17437068628788543},{"time":"2023-12-30","value":0.15928571192277538}],"ROA":[{"time":"2015-01-02","value":0.09335088164463369},{"time":"2016-01-01","value":0.09668629717946865},{"time":"2016-12-30","value":0.1085022189526928},{"time":"2017-12-30","value":0.09695170974384845},{"time":"2018-12-30","value":0.1116355778460966},{"time":"2019-12-30","value":0.10641033259872626},{"time":"2020-12-30","value":0.10257822993978655},{"time":"2021-12-30","value":0.12043563690153095},{"time":"2022-12-30","value":0.1518054823483164},{"time":"2023-12-30","value":0.15186485676358497}]}

Franklin Electric Co., Inc., together with its subsidiaries, designs, manufactures, and distributes water and fuel pumping systems worldwide. It operates through three segments: Water Systems, Fueling Systems, and Distribution. The Water Systems segment offers submersible motors, drives, pumps, electronic controls, water treatment systems, monitoring devices, and related parts and equipment. Its motors and pumps are used principally for pumping clean water and wastewater in various residential, agricultural, municipal, and industrial applications; and manufactures electronic drives and controls that are used in motors for controlling functionality, as well as provides protection from various hazards, such as electrical surges, over-heating, and dry wells or tanks. The Fueling Systems segment provides pumps, pipes, sumps, fittings, vapor recovery components, electronic controls, monitoring devices, and related parts and equipment primarily for use in fueling system applications. This segment serves other energy markets, such as power reliability systems, as well as includes electronic devices for online monitoring of the power utility, hydroelectric, and telecommunication and data center infrastructure. The Distribution segment sells to and provides presale support and specifications to the installing contractors. It sells products produced by the Water Systems segment. The company sells its products to wholesale and retail distributors, specialty distributors, original equipment manufacturers, industrial and petroleum equipment distributors, and oil and utility companies through its employee sales force and independent manufacturing representatives. Franklin Electric Co., Inc. was founded in 1944 and is headquartered in Fort Wayne, Indiana.

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10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Franklin Electric Co Inc

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$285.3M	$314.5M	$344.9M	$376.1M	$408M	$440.3M	$472.5M	$504.4M	$535.5M	$565.4M	$593.6M	$5.936B
DCF		$273.5M	$260.8M	$247.3M	$233.3M	$218.9M	$204.3M	$189.6M	$175M	$160.7M	$146.7M	$1.467B
Value	$3.578B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 15%

Earnings Stability 91%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	01-2016	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	7.7%	8.1%	6.9%	8.1%	7.2%	8%	9.2%	9.1%	9.3%	9.2%
ROA	9.7%	11%	9.7%	11%	11%	10%	12%	15%	15%	15%
ROE	13%	13%	11%	14%	12%	12%	16%	17%	16%	15%

What is the average Net Margin?

The average Net Margin over the past 5 years is +8.5%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +0.37%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +12.41%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +1.01%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +14.56%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +0.84%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Under the assumption that FCF does not diminish and debt does not increase, the current years to repay the debt are acceptable.

The Graham’s stability indicate reliability of earnings, and consideration about the future are more dependable.

Years	01-2016	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	3.45	2.94	9.82	3.00	0.88	0.51	2.88	5.74	0.41	0.48
Debt Equity	0.45	0.36	0.47	0.43	0.17	0.11	0.30	0.32	0.09	0.11
MIN
Graham Stability	-	-	100%	100%	100%	100%	100%	100%	100%	100%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 0.48.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 0.11.

What is the Graham’s Stability?

Graham’s Stability measure stands at 1.00.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	12%	9.7%	18%	1%	2%
Net Income	14%	13%	25%	3.2%	1.9%
Stockholders Equity	10%	10%	12%	13%	1.4%
FCF	20%	21%	13%	360%	-16%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +9.73%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +2.02%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +12.88%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +1.86%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +10.44%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +1.39%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is +20.94%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -15.99%.