Franklin Electric Co. Inc. Common Stock (FELE)

FairStock Score: 53/100 — MIXED

Key Financials

Strengths

• Generates $74 million in annual free cash flow (1.7% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Solid return on equity of 11.4% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.18, providing financial flexibility
• Altman Z-Score of 5.9 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($47) with negative 118% margin of safety—limited downside protection

AI Analysis

Franklin Electric Co. Inc. Common Stock is a small-cap industrials company valued at $4.5 billion. The business generates $2.1 billion in annual revenue with a 1.8% net margin and $74 million in free cash flow. From a quality standpoint, Franklin shows solid Piotroski F-Score of 7/9 and Altman Z-Score of 5.9 confirms fortress-level solvency. On valuation, the stock is trading at a premium 31.6x earnings, with trades far above its Graham Number ($47) with no margin of safety. Growth dynamics show revenue growing at 4.3% and profit growth of 16.6%. The 1.1% dividend yield adds an income component for patient holders. Our composite FairStock Score of 53/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $74 million in annual free cash flow (1.7% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 32x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer