What's Behind EnPro Industries' (NPO) Double-Digit Gains?

NEW YORK (TheStreet) -- EnPro Industries (NPO) enjoyed double-digit gains during Monday's session, exploding 24.1% to $73.48 by early afternoon.

Earlier, the industrial machinery manufacturer announced the United States Bankruptcy Court for the Western District of North Carolina had put forth an estimate for the liability claims against EnPro's Garlock Sealing Technologies subsidiary at $125 million.

"The court has determined that $125 million is sufficient to satisfy Garlock's liability for the legitimate present and future mesothelioma claims against it," noted Judge Hodges upon the ruling.

The final figure determined by the court is as EnPro Industries predicted last year, easing investors' doubts over an uncertain outcome. The trial was in relation to asbestos claims made against the Garlock Sealing Technologies unit.

TheStreet Ratings team rates ENPRO INDUSTRIES INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate ENPRO INDUSTRIES INC (NPO) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, NPO's share price has jumped by 36.42%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • Despite the weak revenue results, NPO has outperformed against the industry average of 21.7%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 38.26% is the gross profit margin for ENPRO INDUSTRIES INC which we consider to be strong. Regardless of NPO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.02% trails the industry average.
  • NPO's debt-to-equity ratio of 0.85 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that NPO's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.69 is low and demonstrates weak liquidity.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Machinery industry and the overall market, ENPRO INDUSTRIES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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