3/8/25
Enpro Inc. (NPO) might not be the first name that comes to mind when thinking about dividend stocks, but for those looking beyond high-yield blue chips, this industrial technology company has some interesting qualities. Enpro specializes in engineered materials and sealing solutions, serving industries like aerospace, semiconductor manufacturing, and healthcare. It operates in a niche market, yet it has built a business that generates strong cash flow, making it worth considering for dividend-focused investors.
Trading around $176.72 with a market cap of $3.69 billion, Enpro has seen solid price appreciation over the past year. But is it a stock that belongs in a dividend investor’s portfolio? Let’s take a closer look.
Key Dividend Metrics
📈 Dividend Yield: 0.71% (Forward)
💰 Annual Dividend Payout: $1.24 per share
📆 Next Dividend Date: March 19, 2025
⏳ Ex-Dividend Date: March 5, 2025
🎯 5-Year Average Yield: 1.15%
🔄 Payout Ratio: 34.78%
📊 Dividend Growth: Slow but steady
Dividend Overview
At first glance, Enpro’s dividend yield isn’t exactly a standout. At just 0.71%, it’s not going to attract investors searching for high-yield income. However, what it lacks in yield, it makes up for in reliability. The company’s payout ratio sits at a comfortable 34.78%, meaning it has plenty of room to maintain and grow its dividend over time.
Looking at its historical performance, Enpro’s dividend yield has hovered around 1.15% over the past five years. While not particularly aggressive in boosting payouts, the company has been consistent. That predictability can be valuable, especially for investors who prefer steady, sustainable income streams rather than high-yield stocks with risky payouts.
Dividend Growth and Safety
Dividend safety is often more important than yield itself. The good news here is that Enpro’s payout is backed by strong financials. With $162.9 million in operating cash flow and $147.28 million in free cash flow, it easily covers its dividend obligations.
One thing to keep in mind is the company’s stock volatility. Enpro has a beta of 1.53, meaning it tends to swing more than the overall market. For long-term dividend investors, this might not be a big issue, but it does mean that reinvesting dividends at the right time could be a little trickier.
From a growth perspective, Enpro’s dividend increases have been modest. This isn’t a stock that’s going to double its payout every few years, but it has shown a commitment to maintaining shareholder returns while reinvesting in the business.
Chart Analysis
Price Trend and Moving Averages
The stock has been on a strong upward trend over the past year, with a clear breakout above previous resistance levels around mid-2024. It peaked above 200 before pulling back in recent weeks, now trading at 176.72. Despite the pullback, it remains above both its 50-day moving average (SMA 50) and 200-day moving average (SMA 200), which is generally a positive sign for longer-term momentum.
The 50-day moving average is still trending upward but has started to flatten slightly, indicating a possible slowing of short-term momentum. Meanwhile, the 200-day moving average continues its steady climb, reinforcing a longer-term uptrend. The fact that the stock is still trading well above the 200-day moving average suggests that the broader trend remains intact, even with the recent pullback.
Volume and Buying/Selling Pressure
Trading volume shows a mix of green and red bars, reflecting periods of both strong buying and selling pressure. There were multiple spikes in volume, particularly around major price movements. A notable increase in volume occurred around December and again in late February, coinciding with a sharp move higher, likely driven by earnings or a major event.
More recently, volume has tapered off slightly, which suggests that selling pressure may be slowing. However, without a clear surge in buying volume, it’s uncertain whether this pullback is over or if further consolidation is ahead.
Relative Strength Index (RSI)
The RSI, which helps gauge whether a stock is overbought or oversold, shows that the stock was in overbought territory in late January and early February, likely contributing to the recent pullback. After cooling off, the RSI has dropped back to more neutral levels, suggesting that some of the excess buying pressure has been worked off.
The key thing to watch here is whether the RSI stabilizes around this range or continues downward. If it bounces and starts rising again, that could indicate renewed bullish momentum. If it keeps dropping, it may signal further downside or consolidation before another leg higher.
Recent Candlestick Behavior
Looking at the last few trading sessions, the stock has seen a mix of higher wicks and lower shadows, showing indecision in the market. There was a notable long wick on the downside a few days ago, suggesting buyers stepped in at lower levels. However, the stock hasn’t shown strong follow-through just yet.
If the stock can regain momentum and push above recent highs, it could suggest that buyers are back in control. On the other hand, if it continues to struggle around the current level, it may need more time to consolidate before making another significant move.
Analyst Ratings
Enpro Inc. has recently been the subject of various analyst evaluations, with opinions split between optimism and caution.
📈 Upgrades:
🔹 In mid-December 2024, KeyBanc Capital Markets increased its price target for Enpro Inc. from $180 to $220 while maintaining an “Overweight” rating. Analysts cited the company’s strong performance in its key markets and successful execution of strategic initiatives aimed at improving operational efficiency and long-term profitability. The company’s steady revenue growth and cost management efforts were key factors in the decision.
📉 Downgrades:
🔻 While no major firm has issued a formal downgrade recently, some analysts have maintained their ratings without increasing price targets. This suggests a more cautious stance, likely due to concerns over market volatility and the company’s exposure to cyclical industries. A few firms have expressed reservations about potential macroeconomic headwinds that could impact demand in Enpro’s industrial segments.
💰 Consensus Price Target:
📊 The consensus price target among analysts currently sits at approximately $217.50. This reflects a mixed sentiment, with some expecting continued growth while others remain wary of external economic risks. Analysts appear to acknowledge the company’s strengths but remain mindful of potential challenges that could impact near-term performance.
Earnings Report Summary
Enpro Inc. just released its latest earnings report, giving investors a solid look at how the company performed in the fourth quarter and throughout 2024. The numbers show a mix of strengths and challenges, but overall, the company managed to improve profitability despite some headwinds in key industries.
Fourth Quarter Performance
Revenue for the fourth quarter came in at $258.4 million, up 3.7% from last year. The company saw strong demand in aerospace, food and pharmaceuticals, industrial applications, and nuclear power, all of which helped offset slower sales in semiconductor capital equipment and commercial vehicle markets. Pricing adjustments also played a role in boosting revenue.
Net income for the quarter hit $13.9 million, a big improvement from the $4.9 million loss reported in the same quarter last year. Earnings per share reflected this turnaround, landing at $0.66 compared to last year’s loss of $0.23 per share. On an adjusted basis, earnings per share climbed 31.9% to $1.57. Adjusted EBITDA also saw a strong gain, rising 24.1% to $58.2 million, showing that Enpro is becoming more efficient and profitable.
Full-Year 2024 Results
For the entire year, Enpro generated $1.05 billion in sales, down just slightly by 1% from 2023. When looking at organic sales, which exclude acquisitions and currency impacts, the decline was 3.9%. This dip was largely due to weaker demand in semiconductor and commercial vehicle markets, but other areas, including nuclear energy and aerospace, helped soften the blow.
On the earnings side, net income surged to $72.9 million for the year, up from $10.8 million in 2023. Earnings per share saw a similar jump, reaching $3.45 compared to $0.51 the year before. Adjusted earnings per share grew 6.4% to $6.96. The company also improved profitability, with adjusted EBITDA rising 7.1% to $254.8 million, pushing the EBITDA margin up to 24.3%.
Segment Breakdown
Enpro’s sealing technologies division had a strong quarter, with sales rising 10.9% to $163 million. Aerospace, nuclear, and food and pharma industries all contributed to growth, and segment EBITDA jumped 31.8% to $50.6 million.
On the flip side, the advanced surface technologies segment struggled, with sales falling 6.4% as semiconductor spending remained weak. Segment EBITDA also dipped slightly by 7% to $21.1 million.
What’s Ahead for 2025
Looking ahead, Enpro expects modest revenue growth in the low-to-mid single digits. The company projects adjusted EBITDA between $262 million and $277 million and adjusted earnings per share ranging from $7.00 to $7.70. Management seems confident that strong cash flow and a solid balance sheet will allow them to invest in growth while staying financially stable.
Enpro’s 2024 performance shows resilience in a tough market. The company managed to grow profits while dealing with industry-specific challenges, and its outlook for 2025 suggests steady progress.
Financial Health and Stability
A company’s ability to pay dividends ultimately comes down to financial health, and Enpro is in solid shape. With a current ratio of 2.59, it has more than enough short-term assets to cover its immediate liabilities.
On the balance sheet, the company holds $236.3 million in cash, providing liquidity and flexibility. However, it does carry $694.7 million in debt, which translates to a debt-to-equity ratio of 48.63%. This isn’t an alarming level, but it does mean the company needs to keep generating steady earnings to avoid any financial strain.
Profitability metrics show a business that’s running efficiently. Enpro has a profit margin of 6.95% and an operating margin of 15.05%. These figures suggest it’s managing costs well while maintaining a solid level of profitability, which bodes well for future dividend payments.
Valuation and Stock Performance
Enpro’s stock isn’t cheap, but it’s also not in bubble territory. It trades at a forward P/E of 23.75, which suggests investors are willing to pay a premium for its earnings potential. Its price-to-sales ratio of 3.53 and price-to-book ratio of 2.58 are reasonable for an industrial technology firm, reflecting a fair balance between valuation and growth potential.
From a technical standpoint, Enpro’s stock has been trending upwards but recently pulled back slightly. Its 50-day moving average sits at $181.08, just above the current price of $176.72, while its 200-day moving average is $164.54. This suggests it has strong longer-term momentum, even if it’s seeing short-term fluctuations.
Over the past year, the stock has ranged between a low of $136.68 and a high of $214.58. It has given back some of its gains, but overall, it has performed well. Investors who bought in at lower levels have likely seen strong total returns when factoring in both stock appreciation and dividends.
Risks and Considerations
Every stock comes with risks, and Enpro is no exception. Here are a few factors that dividend investors should be aware of:
🔺 Low Yield – At just 0.71%, Enpro’s dividend yield is relatively low. Investors looking for substantial income may find better opportunities elsewhere.
🔺 Economic Sensitivity – Since Enpro operates in industrial markets, its earnings are tied to broader economic trends. A slowdown in manufacturing or tech spending could impact revenue and cash flow.
🔺 Stock Volatility – With a beta of 1.53, the stock tends to move more than the overall market. This could be a concern for investors who prefer stability in their dividend holdings.
🔺 Debt Load – While not excessive, the company’s $694.7 million in debt means it must continue generating consistent earnings to avoid any financial strain.
Final Thoughts
Enpro Inc. may not be the first choice for yield-hungry dividend investors, but for those looking for a steady and well-covered payout, it offers some attractive qualities. The company’s low payout ratio, strong cash flow, and stable financials suggest it has the ability to keep paying dividends for the long haul.
While the 0.71% yield won’t appeal to income-focused investors, it’s backed by solid fundamentals. Investors who prioritize safety and long-term capital appreciation may find value here, though those looking for immediate income may prefer stocks with higher yields.
For long-term investors, Enpro presents an interesting combination of financial strength, steady dividends, and capital appreciation potential. However, given its volatility and sensitivity to economic cycles, it’s a stock that requires a bit of patience and a long-term mindset.
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