Enerpac: Transformed Market Leader, With Pricing Power, New CEO

Eric DeLamarter of Half Moon Capital presented his investment thesis on Enerpac Tool Group (US: EPAC) at Wide-Moat Investing Summit 2024.

Thesis summary:

Enerpac is a market leader with demonstrated pricing power across its core industrial pumps and lifts products. The company has undergone a series of transformations that have significantly improved the business profile.

In 2021, a new CEO (formerly at JBT, ITW, DHR) took over and initiated a self-help 80/20 plan which has expanded Enerpac’s margins and earnings. Starting later this year, the 80/20 plan will translate to a material uplift in FCF as program implementation costs cycle-off and the related benefits continue to accrue. Investors are not giving EPAC sufficient credit for the margin improvement and/ or not believing it to be sustainable.

Meanwhile, a favorable shift in end-markets has occurred. Enerpac previously had a high level of exposure to downstream E&P (cyclical, shorter-term projects tied to oil prices), but E&P has become a small percentage of the customer base. This is another dynamic that seems to be underappreciated.

EPAC lost all sell-side coverage following the divestiture of a segment, and the equity has fallen off the radar. Enerpac generates attractive ROIC, has an excellent brand reputation, and possesses pricing power.

The stock recently traded at 18x forward EPS vs peers at 24-28x. According to Eric, several catalysts could lead to 30+% upside over the coming quarters.

The full session is available exclusively to members of MOI Global.

Members, log in below to access the full session.

Not a member?

Thank you for your interest.  Please note that MOI Global is closed to new members at this time. If you would like to join the waiting list, complete the following form:

First name:

Last name:

Email address:

City / state / country:

Company:

How did you hear about MOI Global? Select Member referral Staff This website Media / Internet Other

If referral, please provide member's name:

Which of the following applies most closely to you? Select Investment Firm - Head Investment Firm - Analyst or PM Institutional Allocator - Firm C-Level Executive Institutional Allocator - Firm Employee Family Office - Head or Co-Owner Family Office - Employee Non-Investment Firm - C-Level Executive Non-Investment Firm - Employee Other

How do you hope to add value to the community?

Leave this field empty if you're human:

About the instructor:

Eric DeLamarter is the PM of Half Moon Capital— a research intensive, deep value-oriented, long/ short partnership which invests across various sectors and markets with a focus on small-mid cap companies and special situations. Prior to founding Half Moon, Eric was at Stelliam Investment Management, a value-oriented hedge fund in New York, an associate at Lineage Capital, LLC, a middle-market private equity fund and an investment banking analyst at RBC Capital Markets. Eric holds an MBA from The Heilbrunn Center for Graham & Dodd Investing at Columbia Business School, with a concentration in applied value investing and a BA from the University of Michigan.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.