Overview
D.A. Davidson maintained a Neutral recommendation on Franklin Electric Co. Inc. (NASDAQ: FELE), leaving its price target at $90 following the firm's review of Franklin Electric's fourth-quarter 2025 results. That $90 target sits at the lower bound of the analyst estimate range, which spans from $90 to $120, and the company's shares were trading around $93.06 at the time the data point was recorded. A Fair Value assessment referenced in the results discussion suggests the shares may be modestly undervalued at that trading level.
Quarterly and annual performance
Franklin Electric's revenue performance for the fourth quarter came in short of D.A. Davidson's expectations by about $8 million. The shortfall was attributed to weaker volumes in the Water Systems business across North America, Latin America and the Asia-Pacific region. Despite the quarterly miss, the company reported full-year revenue of $2.13 billion, representing 5.44% growth over the prior twelve months.
On the profitability side, operating profit was roughly $5 million below the firm's internal model, a variance driven primarily by the Water division. That operational underperformance translated to about $0.09 of earnings per share below D.A. Davidson's forecast.
Segment dynamics and guidance
Not all areas were weak: the Energy segment posted high-single-digit organic growth, while Distribution achieved low-single-digit organic growth, partially offsetting the Water Systems decline. For 2026 the company issued initial earnings guidance with a midpoint that sits $0.05 below D.A. Davidson's internal model and $0.23 below consensus estimates, reflecting a cautious outlook heading into the year.
Earnings detail and market reaction
When Franklin Electric reported fourth-quarter 2025 earnings, its per-share result matched the EPS expectation of $0.87. Revenue for the quarter, however, missed the forecast, coming in at $506.9 million versus an expected $516.25 million. That revenue miss contributed to investor concern and was followed by a decline in the company's stock price after the announcement, underscoring the market's sensitivity to top-line performance even when EPS targets are met.
Key points
- D.A. Davidson reiterated a Neutral rating with a $90 price target, which is at the low end of the analyst range ($90 to $120).
- Q4 sales missed D.A. Davidson's estimates by about $8 million, mainly due to volume weakness in Water Systems across North America, Latin America and Asia-Pacific.
- Energy and Distribution segments delivered offsetting organic growth, while 2026 EPS guidance was set below both D.A. Davidson's model and consensus.
Risks and uncertainties
- Continued volume weakness in Water Systems could pressure revenue and operating profit, affecting industrial and equipment manufacturing sectors.
- Initial 2026 EPS guidance below analyst and consensus estimates introduces execution risk for the company and raises investor uncertainty in the short term.
- Market reactions to revenue misses, despite meeting EPS, highlight sensitivity among investors to top-line trends in capital goods and infrastructure-related firms.
What to watch next
Investors and analysts will be monitoring how Franklin Electric addresses Water Systems volume pressures and whether Energy and Distribution can continue to provide offsetting growth. The evolution of full-year 2026 guidance relative to company execution will be a critical factor for near-term sentiment and valuation.