Regal Rexnord (NYSE:RRX) versus Tennant (NYSE:TNC) Financial Survey

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

Institutional & Insider Ownership

93.3% of Tennant shares are owned by institutional investors. Comparatively, 99.7% of Regal Rexnord shares are owned by institutional investors. 2.6% of Tennant shares are owned by company insiders. Comparatively, 0.8% of Regal Rexnord shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

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

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

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.

Risk and Volatility

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for Tennant and Regal Rexnord, as provided by MarketBeat.

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

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

Profitability

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

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

Dividends

Tennant pays an annual dividend of $1.24 per share and has a dividend yield of 1.9%. Regal Rexnord pays an annual dividend of $1.40 per share and has a dividend yield of 0.7%. Tennant pays out 53.0% of its earnings in the form of a dividend. Regal Rexnord pays out 33.3% 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.

Summary

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

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.

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.