Enpro Inc.: Seals, Chips & Compounding Value: The Enpro 3.0 Story: Initiating at Overweight with YE27 PT of $420

Research evidence excerpt

Enpro Inc.: Seals, Chips & Compounding Value: The Enpro 3.0 Story: Initiating at Overweight with YE27 PT of $420

riving our AST revenue Q3 1.99 2.23 2.70

estimate of ~+12.5% to $463M in 2026 and +10.1% to $510M in 2027, and Q4 1.99 2.45 2.91

profitability improving toward a ~25% exit run-rate by year-end 2026. FY 7.93 9.15 10.99

• Sealing Technologies: High-Margin, Aftermarket-Led Durability: The authors wish to thank Rakshit Jain,

Sealing provides a stability anchor through engineered solutions protecting of the J.P. Morgan Global Research

critical environments. Aftermarket exposure, roughly 60% of segment sales, Center, for contributions to this report.

generates recurring, specification-driven demand. In 1Q26, Sealing posted a

32.5% adjusted EBITDA margin, marking nine consecutive quarters above

Pricing in this note is as of the close of 30%, despite commercial vehicle weakness and soft international industrial

demand. We forecast ~13% revenue growth in 2026, driven largely by 7.5% July 16, 2026, unless otherwise stated.

inorganic contribution, with 2027 normalizing to mid-single-digit growth as

cyclical headwinds ease and acquisition contributions annualize.

• Operating Framework: Compounding Returns Augmented by a Strong

Capital Positioning: Enpro 3.0 pairs mid- to high-single-digit organic growth

with capability-expanding M&A funded by free cash flow rather than excess

leverage. Net leverage sits at 1.9x with ~$630M in revolver availability and a

single 2033 maturity, providing capacity for tuck-in acquisitions without

balance sheet strain. First-quarter free cash flow more than doubled YoY to

$26.5M, and ~$50M capex guidance implies rising conversion as growth

spending normalizes. The compounding effect of high-margin organic growth