3/8/25
Franklin Electric Co., Inc. (NASDAQ: FELE) may not be a household name, but it plays a crucial role in industries that keep the world running. The company specializes in water and fueling systems, manufacturing pumps, motors, and controls used in residential, commercial, agricultural, and industrial applications.
For long-term investors, Franklin Electric is the kind of stock that offers a mix of steady growth and financial discipline. It doesn’t promise sky-high dividend yields, but it does deliver a track record of consistency and reliability—two qualities that matter for those who want their portfolio to generate income over time.
With strong fundamentals, solid dividend growth, and a history of smart financial management, this stock deserves a closer look for income-focused investors.
Key Dividend Metrics
📌 Dividend Yield: 1.03%
📌 Forward Annual Dividend: $1.06 per share
📌 5-Year Average Dividend Yield: 0.93%
📌 Payout Ratio: 25.91%
📌 Dividend Growth: Steady increases over time
📌 Ex-Dividend Date: February 6, 2025
📌 Dividend Payment Date: February 20, 2025
Dividend Overview
At first glance, Franklin Electric’s dividend yield of just over 1% might not seem too exciting. For investors looking for high-yield stocks, this might not make the shortlist. But when looking at the bigger picture, this company’s ability to steadily grow its dividend makes it an attractive option for those with a long-term mindset.
One of the standout numbers is the payout ratio, which sits at just under 26%. That means Franklin Electric is only paying out a small portion of its earnings as dividends, leaving plenty of room for future increases. A low payout ratio also signals financial strength, reducing the risk of dividend cuts if business slows down.
The company has consistently raised its dividend over time, proving that management is committed to returning value to shareholders. While the yield may be modest, the consistent growth in payouts is what makes this stock appealing for those who plan to hold it for years to come.
Dividend Growth and Safety
A stable and growing dividend is only as good as the financial foundation behind it. Franklin Electric is in a strong position when it comes to dividend safety.
✔️ The payout ratio is low, leaving room for future increases.
✔️ The company maintains a strong balance sheet with a manageable level of debt.
✔️ Franklin Electric has a track record of consistent dividend increases.
One of the best indicators of dividend stability is cash flow, and the company is generating plenty of it. With operating cash flow of over $261 million and free cash flow of $244 million, Franklin Electric has no problem covering its dividend payments.
The company also carries relatively low debt, with a debt-to-equity ratio of just 15%. This means the business isn’t overly leveraged, making it less vulnerable to economic downturns.
When looking at return metrics, Franklin Electric shows strong efficiency, with a return on equity (ROE) of 14.6% and a return on assets (ROA) of 8.8%. These numbers suggest management is making good use of shareholder capital.
Chart Analysis
Price Movement and Trend
Franklin Electric (FELE) has been trading with some noticeable volatility over the past year. The stock has made several sharp moves both upward and downward, reflecting changing market sentiment. Right now, the price is sitting at $102.75, closing near its high for the day, which suggests some strength going into the next trading session.
The 50-day moving average (blue line) has been trending above the 200-day moving average (purple line) for most of the year, signaling a generally bullish trend. However, in recent months, the price dipped below both moving averages before rebounding. It looks like the stock is attempting to push back above the longer-term 200-day moving average, which could be an early indication of a potential shift in momentum.
Volume and Market Activity
Trading volume came in at 248,746 shares, which appears relatively stable compared to the average. There were some big spikes in volume around October and December, suggesting heavy institutional activity or key market events that triggered increased buying and selling.
In the past few weeks, volume has been steady but without any major surges. This suggests that while buyers are stepping in at key levels, there isn’t an overwhelming rush of demand just yet. A breakout above resistance on strong volume would provide more confirmation of sustained upward momentum.
Relative Strength Index (RSI)
The RSI indicator at the bottom of the chart has been climbing recently, moving up from oversold conditions. Previously, the stock had been stuck in a downward RSI trend, indicating weakening momentum. However, the recent uptick suggests a potential shift toward more buying pressure.
An RSI moving higher from oversold territory can often be an early sign of a trend reversal. That being said, it hasn’t yet reached overbought conditions, meaning there could still be room for upside before the stock becomes overheated.
Moving Average Interaction
The price action relative to the moving averages is key here. The 50-day moving average recently dipped below the 200-day moving average, which typically signals a bearish trend, but the stock is now pushing back above both. If the price can hold above these levels, it would suggest buyers are regaining control.
A sustained move above the 200-day moving average, combined with increasing volume and continued RSI strength, could be a sign that FELE is entering a new upward phase. However, if the stock fails to hold above these levels and starts rolling over again, it could indicate another period of consolidation or even downside movement.
Recent Candlestick Action
Looking at the last few candlesticks, there’s been a mix of buying and selling pressure. The most recent candle shows a strong close near the high of the day, which is generally a bullish signal. The wicks on previous candles suggest some indecision in the market, with both buyers and sellers active.
If FELE can build on today’s strength and push above its recent trading range, it could spark more buying interest. On the other hand, if resistance proves too strong, the stock might settle back into its previous range or retest lower support levels.
Analyst Ratings
Franklin Electric Co., Inc. (NASDAQ: FELE) has recently experienced a range of analyst opinions, reflecting both positive and cautious sentiments.
Upgrades:
- February 23, 2024: 📈 Northcoast Research upgraded Franklin Electric from “Hold” to “Strong Buy.” This positive shift was attributed to the company’s robust financial performance and promising growth prospects in its core markets. The analyst expressed confidence in Franklin Electric’s strategic initiatives and its ability to capitalize on increasing demand for water and fueling systems.
Downgrades:
- August 15, 2022: 📉 Northcoast Research downgraded Franklin Electric from “Strong Buy” to “Hold.” This change was due to concerns about potential market saturation and increased competition, which could impact the company’s market share and profitability. The analyst also noted that the stock’s valuation had reached levels that warranted a more cautious outlook.
🔹 As of the latest consensus among analysts, Franklin Electric holds a “Hold” rating, with an average price target of $100.50. This target suggests a slight downside from the current trading price, indicating that analysts are adopting a cautious stance on the stock’s near-term performance.
These mixed ratings highlight the importance of staying informed about the company’s developments and market conditions, as analyst opinions can shift with changing business dynamics.
Earnings Report Summary
Franklin Electric recently shared its latest earnings report, giving investors a look at how the company performed in the fourth quarter and throughout 2024. While the numbers were a bit of a mixed bag, the company continues to show resilience and a solid foundation for future growth.
Fourth Quarter 2024 Highlights
Revenue for the quarter came in at $485.7 million, which was a 3 percent increase from the same period last year. That’s a positive sign, showing steady demand for the company’s products. However, operating income was down, landing at $43.0 million compared to $50.8 million in the previous year’s fourth quarter. The operating margin also slipped to 8.9 percent, indicating some pressure on profitability.
Earnings per share came in at $0.72, slightly lower than the $0.82 reported in the fourth quarter of 2023. While not ideal, the drop isn’t alarming, as Franklin Electric continues to manage costs and adjust to market conditions.
Full Year 2024 Performance
For the full year, total revenue hit $2.0 billion, which was a slight 2 percent decline from last year’s $2.1 billion. Despite this, Franklin Electric still delivered a strong operating income of $243.6 million, though it was lower than the previous year’s $262.4 million.
Earnings per share for the year ended at $3.86, down from $4.11 the year before. On the bright side, the company continued to generate strong cash flow, pulling in $261.4 million from operating activities, reinforcing its ability to invest in growth and return value to shareholders.
Performance by Business Segment
- Water Systems stayed flat in the fourth quarter with $279.6 million in revenue. While sales of groundwater and water treatment products were strong, they were offset by lower demand for large dewatering pumps.
- Distribution saw some growth, with sales rising 6 percent to $157.2 million, thanks to higher volumes and contributions from acquisitions.
- Energy Systems (previously known as Fueling Systems) was a standout, growing 5 percent to $68.8 million. The company rebranded this segment to reflect a broader focus on energy-related technologies.
Management’s Perspective
CEO Joe Ruzynski acknowledged that while some challenges remain, Franklin Electric is still in a strong position. He pointed out that post-pandemic backlogs have eased, but overall demand remains steady. The company is focused on driving revenue growth and expanding profit margins in 2025 through innovation and strategic investments.
2025 Outlook
Looking ahead, Franklin Electric expects revenue to land between $2.09 billion and $2.15 billion in 2025. Earnings per share are projected to range from $4.05 to $4.25, which suggests the company is optimistic about growth opportunities.
Overall, while 2024 had its ups and downs, Franklin Electric is staying on course, making smart moves to ensure long-term success.
Financial Health and Stability
Franklin Electric isn’t the kind of stock that gets attention for rapid, explosive growth, but it does stand out for its financial discipline.
✔️ Profit Margin: 8.92% – A solid sign of profitability.
✔️ Operating Margin: 10.66% – Indicates efficiency in operations.
✔️ Total Cash: $220.5M – Provides financial flexibility.
✔️ Quarterly Revenue Growth: 2.7% year-over-year – Slow but steady growth.
The company reported annual revenue of $2.02 billion, and while its quarterly earnings saw a slight decline of 12.7%, its overall financial health remains strong.
What’s particularly reassuring is the company’s liquidity. A current ratio of 2.22 means Franklin Electric has more than enough short-term assets to cover its liabilities. This adds another layer of protection for investors who value stability.
Valuation and Stock Performance
At a price of $102.75, Franklin Electric is not a cheap stock, but quality rarely comes at a discount. The current valuation metrics suggest the stock is fairly priced given its stability and growth prospects.
- Trailing P/E Ratio: 26.62
- Forward P/E Ratio: 24.39
- Price-to-Book Ratio: 3.71
- Enterprise Value/EBITDA: 15.87
- PEG Ratio (5-Year Expected): 2.03
Looking at recent performance, Franklin Electric has traded in a 52-week range between $91.67 and $111.94. It currently sits near its 50-day moving average of $99.76 and its 200-day moving average of $100.98.
While the stock isn’t necessarily cheap, it also isn’t outrageously priced. Investors who prioritize financial strength and dividend reliability may find the current valuation reasonable, especially given the company’s track record of long-term performance.
Risks and Considerations
Even the most stable dividend stocks come with some risks. Franklin Electric is no exception.
❌ Economic Sensitivity – As an industrial company, its revenue is tied to broader economic trends. A slowdown in construction, infrastructure projects, or agriculture could impact demand for its products.
❌ Cost Pressures – Rising raw material and labor costs could squeeze profit margins over time.
❌ Modest Dividend Yield – For income-focused investors, the relatively low yield may not be appealing. While the dividend growth is strong, those looking for immediate high income may prefer other options.
❌ Stock Valuation – While not excessively overvalued, the stock isn’t trading at a discount either. Investors who prioritize value may prefer to wait for a pullback before initiating a position.
Final Thoughts
Franklin Electric is the kind of company that rewards patient investors. While the dividend yield is on the lower side, the company’s financial health, history of dividend increases, and strong cash flow make it a solid choice for those focused on long-term income growth.
This is a business that prioritizes steady, sustainable returns over flashy short-term gains. For investors looking to add a financially sound, dividend-growing industrial stock to their portfolio, Franklin Electric is a name worth keeping on the radar.
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