Analyzing Tennant (NYSE:TNC) & Regal Rexnord (NYSE:RRX)

Regal Rexnord (NYSE:RRX) and Tennant (NYSE:TNC) are both industrials companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, institutional ownership, earnings and risk.

Profitability

This table compares Regal Rexnord and Tennant’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Regal Rexnord	4.71%	9.60%	4.61%
Tennant	3.64%	16.05%	8.19%

Institutional and Insider Ownership

99.7% of Regal Rexnord shares are owned by institutional investors. Comparatively, 93.3% of Tennant shares are owned by institutional investors. 0.8% of Regal Rexnord shares are owned by company insiders. Comparatively, 2.6% of Tennant shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Regal Rexnord pays an annual dividend of $1.40 per share and has a dividend yield of 0.7%. Tennant pays an annual dividend of $1.24 per share and has a dividend yield of 1.9%. Regal Rexnord pays out 33.3% of its earnings in the form of a dividend. Tennant pays out 53.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Tennant has raised its dividend for 53 consecutive years. Tennant is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Regal Rexnord has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500. Comparatively, Tennant has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Valuation & Earnings

This table compares Regal Rexnord and Tennant”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Regal Rexnord	$5.93 billion	2.13	$279.50 million	$4.20	45.31
Tennant	$1.20 billion	0.95	$43.80 million	$2.34	27.42

Regal Rexnord has higher revenue and earnings than Tennant. Tennant is trading at a lower price-to-earnings ratio than Regal Rexnord, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations for Regal Rexnord and Tennant, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Regal Rexnord	0	3	7	0	2.70
Tennant	1	2	1	0	2.00

Regal Rexnord presently has a consensus target price of $227.50, suggesting a potential upside of 19.56%. Tennant has a consensus target price of $91.00, suggesting a potential upside of 41.85%. Given Tennant’s higher possible upside, analysts plainly believe Tennant is more favorable than Regal Rexnord.

Summary

Regal Rexnord beats Tennant on 10 of the 17 factors compared between the two stocks.

About Regal Rexnord

Regal Rexnord Corporation manufactures and sells industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems worldwide. The Industrial Powertrain Solutions segment provides mounted and unmounted bearings, couplings, mechanical power transmission drives and components, gearboxes, gear motors, clutches, brakes, special, and industrial powertrain components and solutions for food and beverage, bulk material handling, eCommerce/warehouse distribution, energy, mining, marine, agricultural machinery, turf and garden, and general industrial markets. The Power Efficiency Solutions segment offers AC and DC motors, electronic variable speed controls, and blowers for residential, commercial HVAC, water heaters, commercial refrigeration, commercial building ventilation, pool and spa, irrigation, agriculture, conveying, and general commercial equipment markets. The Automation and Motion Control segment provides conveyor products, conveying automation subsystems, aerospace components, rotary precision motion solutions, high-efficiency miniature motors, motion controls, automation transfer switches, and switchgear for industrial applications and automation systems for material handling, aerospace and defense, factory automation, data centers, medical device, packaging, printing, semiconductor, robotic, industrial power tool, mobile off-highway, food and beverage processing, and other applications. The Industrial Systems segment offers integral motors, alternators, and aftermarket parts and kits for agriculture, marine, mining, oil and gas, food and beverage, data centers, prime and standby power, and general industrial equipment markets. It sells its products directly to original equipment manufacturers, distributors, and end-users. The company was formerly known as Regal Beloit Corporation. The company was founded in 1955 and is based in Milwaukee, Wisconsin.

About Tennant

Tennant Company, together with its subsidiaries, designs, manufactures, and markets floor cleaning equipment in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers a suite of products, including floor maintenance and cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair services, and asset management solutions. It provides business solutions, such as financing, rental, and leasing programs, as well as machine-to-machine asset management solutions. The company offers its products under the Tennant, Nobles, Alfa Uma Empresa Tennant, IPC, Gaomei, and Rongen brands, as well as private-label brands. Its products are used in retail establishments and distribution centers; factories and warehouses; and public venues, such as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, and other environments. The company markets its products to contract cleaners and businesses through direct sales and service organizations, as well as through a network of authorized distributors. Tennant Company was founded in 1870 and is headquartered in Eden Prairie, Minnesota.