Analyzing Otis Worldwide (NYSE:OTIS) & Regal Rexnord (NYSE:RRX)

Otis Worldwide (NYSE:OTIS) and Regal Rexnord (NYSE:RRX) are both large-cap industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.

Earnings and Valuation

This table compares Otis Worldwide and Regal Rexnord”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Otis Worldwide	$14.43 billion	1.94	$1.38 billion	$3.76	19.36
Regal Rexnord	$5.93 billion	2.25	$279.50 million	$4.30	46.73

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

Risk & Volatility

Otis Worldwide has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, Regal Rexnord has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500.

Dividends

Otis Worldwide pays an annual dividend of $1.76 per share and has a dividend yield of 2.4%. Regal Rexnord pays an annual dividend of $1.40 per share and has a dividend yield of 0.7%. Otis Worldwide pays out 46.8% of its earnings in the form of a dividend. Regal Rexnord pays out 32.6% 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. Otis Worldwide has increased its dividend for 5 consecutive years. Otis Worldwide is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Otis Worldwide	10.11%	-29.39%	14.86%
Regal Rexnord	4.78%	9.49%	4.65%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Otis Worldwide and Regal Rexnord, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Otis Worldwide	1	7	3	0	2.18
Regal Rexnord	0	3	6	0	2.67

Otis Worldwide presently has a consensus price target of $97.64, suggesting a potential upside of 34.13%. Regal Rexnord has a consensus price target of $231.00, suggesting a potential upside of 14.97%. Given Otis Worldwide’s higher probable upside, equities research analysts clearly believe Otis Worldwide is more favorable than Regal Rexnord.

Institutional & Insider Ownership

88.0% of Otis Worldwide shares are owned by institutional investors. Comparatively, 99.7% of Regal Rexnord shares are owned by institutional investors. 0.1% of Otis Worldwide shares are owned by insiders. Comparatively, 0.6% of Regal Rexnord shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

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

About Otis Worldwide

Otis Worldwide Corporation engages in manufacturing, installation, and servicing of elevators and escalators in the United States, China, and internationally. The company operates in two segments, New Equipment and Service. The New Equipment segment designs, manufactures, sells, and installs a range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings, and infrastructure projects. This segment serves real-estate and building developers, and general contractors. It sells its products directly to customers, as well as through agents and distributors. The Service segment performs maintenance and repair services, as well as modernization services to upgrade elevators and escalators. Otis Worldwide Corporation was founded in 1853 and is headquartered in Farmington, Connecticut.

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.