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Franklin Electric Co. (FELE)
NASDAQ:FELE
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Franklin Electric Co
(NASDAQ:FELE)
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Rating:70Outperform
Price Target:
$100.00
▲(4.34% Upside)
The score is driven primarily by solid financial quality (low leverage, stable gross margins, and generally strong cash generation) and supportive earnings-call guidance with an emphasis on margin expansion. This is tempered by weak technical positioning (price below major moving averages despite an oversold RSI) and a relatively high P/E with only a modest dividend yield.
Positive Factors
Conservative balance sheet
Low leverage and equity growth give Franklin structural financial flexibility to fund R&D, acquisitions and buybacks without stressing liquidity. A D/E near 0.18 supports resilience through cycles and underpins durable capital allocation and investment capacity over the next 2–6 months.
Strong cash generation
Sizable, positive free cash flow and strong cash coverage of earnings provide a durable funding source for dividends, buybacks and targeted M&A. Even with variable FCF growth, current cash generation supports shareholder returns and operational investments over the medium term.
Product innovation pipeline
A growing new-product pipeline that management expects to triple and deliver material revenue in years 2–3 enhances organic growth prospects and reduces reliance on cyclic end markets. Durable product introductions support margin resilience and deeper channel penetration over coming quarters.
Negative Factors
Energy margin pressure
Tariffs, adverse geographic mix and needed investments have compressed Energy margins. These headwinds can persist as price pass-through lags and tariffs or regional exposure remain, limiting near-term margin expansion and making segment profitability recovery uneven over the next several quarters.
Negative FCF growth trend
Although FCF is positive, the multi-year decline in FCF growth signals less reliable cash momentum. Continued variability in working capital and cash conversion could constrain incremental capital returns or acquisitions and reduce cushion for cyclical downturns during the coming 2–6 months.
Regional and end-market softness
Sustained weakness in HVAC demand and softness in Latin America and Asia indicate cyclical and regional exposure. End-market variability and multi-quarter cycles in dewatering reduce predictability of revenue and margins, raising execution risk for meeting steady growth targets in the near term.
Franklin Electric Co (FELE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.05B
Dividend Yield1.06%
Average Volume (3M)275.68K
Price to Earnings (P/E)28.2
Beta (1Y)0.84
Revenue Growth5.06%
EPS Growth-22.73%
CountryUS
Employees6,300
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)0.87
Shares Outstanding44,510,380
10 Day Avg. Volume329,330
30 Day Avg. Volume275,675
Financial Highlights & Ratios
PEG Ratio-1.72
Price to Book (P/B)3.26
Price to Sales (P/S)2.03
P/FCF Ratio22.33
Enterprise Value/Market Cap1.10
Enterprise Value/Revenue2.09
Enterprise Value/Gross Profit5.88
Enterprise Value/Ebitda16.54
Forecast
1Y Price Target
$90.00Price Target Upside-6.09% Downside
Rating ConsensusHold
Number of Analyst Covering2
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Franklin Electric Co Business Overview & Revenue Model
Company DescriptionFranklin 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, pumps, drives, 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.
How the Company Makes MoneyFranklin Electric generates revenue primarily through the sale of its water and fueling systems products. The company has multiple key revenue streams, including direct sales of pumps, motors, controls, and accessories for water and fuel applications. Additionally, Franklin Electric benefits from aftermarket sales, which include replacement parts and services for its installed systems. The company has established significant partnerships with distributors, contractors, and OEMs that enhance its market reach and sales potential. Furthermore, developments in technology and sustainable practices in water management and fuel systems play a vital role in driving demand for Franklin Electric's innovative solutions, contributing to its overall earnings.
Franklin Electric Co Earnings Call Summary
Earnings Call Date:Feb 17, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The earnings call presented a predominantly positive operational and financial picture: company-wide revenue and segment operating income reached multi-year highs, cash conversion remained strong (126%), Distribution and Water treatment businesses showed significant margin improvement, and management outlined a clear transformation agenda (Value Acceleration Office) and a sizable new-product pipeline. Key challenges include a GAAP EPS hit from a large pension settlement charge, Energy segment margin pressure due to tariffs and geographic mix, and some regional softness (HVAC in the U.S., Latin America and parts of Asia). Management provided constructive 2026 guidance (midpoint sales growth ~3% and adjusted EPS midpoint ~9%) and emphasized continued margin expansion and product-driven growth. On balance, the positives — record revenue, operating income, margin improvement in core growth areas, strong cash conversion, active capital allocation and a focused transformation program — outweigh the headwinds presented.Q4-2025 Updates
Positive Updates
Record Revenue and Operating Income
Full year 2025 consolidated sales were $2.1 billion, up 5.4% year-over-year; consolidated operating income was $269.0 million, up 10% from $243.6 million, with operating income margin of 12.6% (up 50 basis points). Q4 sales were $506.9 million, up 4.4%, and Q4 consolidated operating income was $51.6 million, up 20% year-over-year.
Strong Cash Conversion and Balance Sheet Actions
Cash conversion was 126%, marking the third consecutive year >120%. The company generated $239 million in net cash from operating activities in 2025, ended the year with $99.7 million cash and $30 million outstanding on the revolver, completed about $120 million of acquisitions and roughly $160 million in share buybacks (including ~1.8 million shares repurchased during the year).
Adjusted EPS Growth and Guidance
Adjusted diluted EPS was $4.14 in 2025 versus $3.92 in 2024 (+6%). Management guided 2026 adjusted EPS to $4.40–$4.60 (midpoint ~9% growth) and sales to $2.17–$2.24 billion (midpoint ~3% growth).
Product Innovation Pipeline
Added over 35 new products in 2025 with an expectation that these will deliver more than $160 million in revenue by year 3; management expects the new-product pipeline to more than triple in coming years.
Water Treatment and Distribution Margin Improvements
Water treatment sales exited 2025 at $200 million and reported an operating margin improvement of over 400 basis points in 2025. Distribution business grew to over $700 million and improved operating margin by 210 basis points full year; Distribution full-year operating income rose to $39.8 million (up 64% year-over-year).
SG&A and Gross Profit Trends
Full-year gross profit increased to $755.9 million (from $717.3 million); gross margin was stable at 35.5%. SG&A improved 50 basis points year-over-year (130 bps improvement excluding acquisition impact); Q4 SG&A improved ~70 bps year-over-year.
Operational Transformation Initiatives
Launched a Value Acceleration Office leveraging 80-20, AI and process engineering to streamline portfolio, reduce complexity and improve margins; several projects are already running with expected readouts in 2026 and contribution baked into guidance.
Dividend Increase and Shareholder Returns
Declared quarterly cash dividend of $0.28 (5.7% increase), marking the 34th consecutive year of dividend increases; continued meaningful share repurchases (Q4 repurchases ~350,000 shares for $34.3 million).
Negative Updates
GAAP EPS Decline from Pension Charge
Full-year GAAP diluted EPS was $3.22 versus $3.86 in 2024. GAAP EPS was negatively impacted by a pension settlement charge of $41.5 million (net of tax, ~$0.91 per share) and $0.01 of restructuring charges; management now emphasizes adjusted EPS for 2026 guidance.
Energy Segment Margin Pressure
Energy Systems Q4 operating income declined to $22.6 million from $24.7 million prior year and Q4 operating margin fell 560 basis points to 30.3% (from 35.9%). Full-year Energy margin declined 110 basis points to 33.1% (from 34.2%), driven by unfavorable geographic mix, tariff impacts and investments for growth.
Regional and End-Market Softness in Water
Global Water Systems U.S. and Canada sales were down 4% in Q4 driven by softer HVAC markets and channel destocking; excluding acquisitions and FX, Q4 Water sales decreased ~1%, with declines in Latin America and Asia noted. Mexican market weakness in 2H 2025 required stabilization efforts.
Acquisition-Related Cost and Margin Drag
Global Water full-year operating margin decreased 20 basis points (16.5% vs 16.7% prior year), with management attributing part of the decline to acquisition-related costs; SG&A increases in Q4 were primarily due to acquisition-related expenses.
Reduced Operating Cash and Remaining Buyback Capacity
Net cash from operating activities decreased to $239 million from $261 million in 2024. Remaining share repurchase authorization at Q4 end was approximately 0.8 million shares, indicating limited remaining buyback capacity under the current authorization.
Tariff Timing and Price Realization Headwinds
Tariff-related cost pressures and timing of price pass-through negatively impacted margins in late 2025 (notably in Energy), requiring staged price increases with some lagged realization in Q4 results.
Large Dewatering Volatility
Large dewatering showed variability: full-year growth was positive but Q4 growth (7%) followed a strong prior year rebound and management cautioned the business runs in multi-quarter cycles; end‑of‑year capital spending pauses contributed to deceleration.
Higher Effective Tax Rate
Full-year effective tax rate increased to 23.6% from 21.7% in the prior year (Q4 effective rate 18.7% vs 15.8%), driven by a mix of foreign earnings taxed at different rates and less favorable discrete items, which weighed on net income.
Company Guidance
Franklin guided full‑year 2026 adjusted EPS of $4.40–$4.60 and sales of $2.17–$2.24 billion (midpoint implying just over ~3% sales growth and roughly ~9% midpoint EPS growth), with segment organic growth targets of about 3–5% for Water, just over ~3% for Energy, and ~3–4% for Distribution; Energy is expected to realize ~1.5–2.0% price increases this year and its margins should recover modestly toward the low‑to‑mid‑30% range, Distribution margins are expected to expand further (management cited another ~70+ basis points of improvement potential) and management expects margin expansion across all segments, following normal seasonality (lighter Q1 and Q4, heavier Q2–Q3) but with growth across every quarter; guidance will be presented on an adjusted (non‑GAAP) EPS basis with reconciliations to GAAP.Franklin Electric Co Financial Statement Overview
Summary
Strong fundamentals supported by meaningful revenue scaling since 2020, stable mid-30% gross margins, and a conservative balance sheet with low leverage (2025 D/E ~0.18). Offsetting this, profitability softened in 2025 (net margin down to ~6.9%) and free cash flow growth has been negative in 2024–2025, indicating some normalization and cash-conversion variability.Income Statement
Revenue has scaled meaningfully over the cycle (up from ~$1.25B in 2020 to ~$2.13B in 2025), supported by steady gross margins in the mid-30% range. Profitability is solid, but recent performance softened: net margin fell from ~8.9% (2024) to ~6.9% (2025) and EBITDA margin also stepped down. Growth has been uneven (a dip in 2024 followed by a rebound in 2025), suggesting a more mature, cyclical profile rather than consistent acceleration.76
Positive
Balance Sheet
The balance sheet looks conservative with low leverage: debt-to-equity is ~0.18 in 2025 and has generally remained modest over time. Equity has grown alongside assets, and returns on equity remain healthy (~11% in 2025, higher in prior years), indicating the company still converts capital into earnings reasonably well. The main watch item is the decline in returns versus 2022–2023 levels, implying some normalization in profitability or efficiency.82
Very Positive
Cash Flow
Cash generation is generally strong, with free cash flow remaining positive and sizable (about $194M in 2025). Free cash flow covers a large portion of net income (roughly 81% in 2025), but cash flow momentum is mixed: free cash flow growth turned negative in 2024 and stayed negative in 2025. Operating cash flow relative to earnings is also moderate in the last two years versus the stronger conversion seen in 2020 and 2023, pointing to some working-capital or cash conversion variability.71
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.13B | 2.02B | 2.07B | 2.04B | 1.66B |
| Gross Profit | 755.92M | 717.28M | 697.01M | 691.43M | 576.09M |
| EBITDA | 332.57M | 294.24M | 306.27M | 297.13M | 239.47M |
| Net Income | 147.09M | 180.31M | 193.27M | 187.33M | 153.86M |
Balance Sheet | |||||
| Total Assets | 1.94B | 1.82B | 1.73B | 1.69B | 1.58B |
| Cash, Cash Equivalents and Short-Term Investments | 99.66M | 220.54M | 84.96M | 45.79M | 40.54M |
| Total Debt | 280.49M | 191.62M | 156.28M | 264.84M | 236.77M |
| Total Liabilities | 619.02M | 550.77M | 517.83M | 623.40M | 626.54M |
| Stockholders Equity | 1.33B | 1.27B | 1.21B | 1.07B | 946.48M |
Cash Flow | |||||
| Free Cash Flow | 193.54M | 219.67M | 274.30M | 59.77M | 99.65M |
| Operating Cash Flow | 238.88M | 261.35M | 315.71M | 101.67M | 129.76M |
| Investing Cash Flow | -157.13M | -45.63M | -74.29M | -43.07M | -264.81M |
| Financing Cash Flow | -197.31M | -74.07M | -192.19M | -48.47M | 50.89M |
Franklin Electric Co Technical Analysis
Negative
95.84
Price Trends
99.51
Negative
96.97
Negative
94.07
Positive
Market Momentum
-0.55
Positive
41.52
Neutral
17.00
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FELE, the sentiment is Negative. The current price of 95.84 is below the 20-day moving average (MA) of 101.76, below the 50-day MA of 99.51, and above the 200-day MA of 94.07, indicating a neutral trend. The MACD of -0.55 indicates Positive momentum. The RSI at 41.52 is Neutral, neither overbought nor oversold. The STOCH value of 17.00 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FELE.
Franklin Electric Co Risk Analysis
Franklin Electric Co disclosed 20 risk factors in its most recent earnings report. Franklin Electric Co reported the most risks in the "Ability to Sell" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Franklin Electric Co Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $10.99B | 32.43 | 18.25% | 0.70% | 4.18% | 16.05% | |
77 Outperform | $4.67B | 23.57 | 21.55% | 1.09% | 8.75% | 64.82% | |
70 Outperform | $4.05B | 28.22 | 10.89% | 1.06% | 5.06% | -22.73% | |
69 Neutral | $1.71B | 32.24 | 13.45% | 1.49% | 3.19% | 31.51% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $5.44B | 182.26 | 1.71% | ― | 7.81% | ― | |
61 Neutral | $14.50B | 52.01 | 4.27% | 0.97% | -4.99% | 22.16% |
* Industrials Sector Average
FELE
Franklin Electric Co
95.84
-6.80
-6.62%
GRC
Gorman-Rupp Company
65.69
28.13
74.91%
MWA
Mueller Water Products
29.97
5.19
20.92%
RRX
Regal Rexnord
215.36
83.03
62.74%
WTS
Watts Water Technologies
326.69
115.55
54.73%
MIR
Mirion Technologies
21.28
6.01
39.36%
Franklin Electric Co Corporate Events
Business Operations and StrategyRegulatory Filings and Compliance
Franklin Electric Highlights Strategy at Citi Industrial Tech Conference
Positive
Feb 18, 2026
On February 18, 2026, Franklin Electric Co., Inc. presented at Citi’s 2026 Global Industrial Tech and Mobility Conference, highlighting its role in the industrial technology and mobility space. The company simultaneously made its presentation materials available on its investor relations website, signaling an effort to enhance transparency and communication with investors and other market participants.
The materials related to this conference appearance were furnished rather than filed under U.S. securities regulations, indicating they are provided for informational purposes without being incorporated into the company’s formal securities filings. This approach allows Franklin Electric to share strategic and operational insights with the market while limiting the regulatory implications of the disclosed content.
The most recent analyst rating on (FELE) stock is a Buy with a $121.00 price target. To see the full list of analyst forecasts on Franklin Electric Co stock, see the FELE Stock Forecast page.
Financial DisclosuresRegulatory Filings and Compliance
Franklin Electric Releases Q4 2025 Earnings Presentation Materials
Neutral
Feb 17, 2026
On February 17, 2026, Franklin Electric Co., Inc. posted its Q4 2025 earnings call presentation materials on the investor relations section of its website, making the slide deck publicly available to shareholders and analysts. The materials were furnished, rather than filed, under a current report framework, indicating they are meant for informational purposes to support the company’s upcoming earnings discussion without carrying the legal status of formally filed financial disclosures.
The most recent analyst rating on (FELE) stock is a Hold with a $111.00 price target. To see the full list of analyst forecasts on Franklin Electric Co stock, see the FELE Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.