Critical Comparison: Kadant (NYSE:KAI) & Ingersoll Rand (NYSE:IR)

Kadant (NYSE:KAI) and Ingersoll Rand (NYSE:IR) are both industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, risk, dividends, earnings, institutional ownership, analyst recommendations and valuation.

Analyst Ratings

This is a summary of current recommendations and price targets for Kadant and Ingersoll Rand, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kadant	0	3	1	0	2.25
Ingersoll Rand	0	5	4	0	2.44

Kadant currently has a consensus target price of $341.50, suggesting a potential upside of 20.75%. Ingersoll Rand has a consensus target price of $92.75, suggesting a potential upside of 25.37%. Given Ingersoll Rand’s stronger consensus rating and higher possible upside, analysts plainly believe Ingersoll Rand is more favorable than Kadant.

Dividends

Kadant pays an annual dividend of $1.44 per share and has a dividend yield of 0.5%. Ingersoll Rand pays an annual dividend of $0.08 per share and has a dividend yield of 0.1%. Kadant pays out 16.4% of its earnings in the form of a dividend. Ingersoll Rand pays out 5.4% 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. Kadant has raised its dividend for 12 consecutive years. Kadant is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Kadant has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500. Comparatively, Ingersoll Rand has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Insider and Institutional Ownership

96.1% of Kadant shares are owned by institutional investors. Comparatively, 95.3% of Ingersoll Rand shares are owned by institutional investors. 1.3% of Kadant shares are owned by company insiders. Comparatively, 0.5% of Ingersoll Rand shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Kadant and Ingersoll Rand”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kadant	$1.05 billion	3.17	$101.97 million	$8.77	32.25
Ingersoll Rand	$7.65 billion	3.78	$581.40 million	$1.48	49.99

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

Profitability

This table compares Kadant and Ingersoll Rand’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kadant	9.45%	12.13%	7.33%
Ingersoll Rand	7.54%	12.79%	7.16%

Summary

Ingersoll Rand beats Kadant on 9 of the 17 factors compared between the two stocks.

About Kadant

Kadant Inc. supplies technologies and engineered systems worldwide. It operates in three segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment develops, manufactures, and markets fluid-handling systems and equipment, such as rotary joints, syphons, turbulator bars, expansion joints, and engineered steam and condensate systems; and doctoring, cleaning, and filtration systems and related consumables consisting of doctor systems and holders, doctor blades, cleaning shower and fabric-conditioning systems, forming systems and wear surfaces, and water-filtration systems. The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, engineered knife systems, industrial automation and control, recycling and approach flow systems, and virgin pulping process equipment for use in the packaging, tissue, wood products, and alternative fuel industries. The Material Handling segment offers conveying and vibratory equipment, and baling products; and manufactures and sells biodegradable absorbent granules for carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. The company markets and sells its products, services, and systems through direct sales, independent sales agents, and distributors. The company was formerly known as Thermo Fibertek, Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was incorporated in 1991 and is headquartered in Westford, Massachusetts.

About Ingersoll Rand

Ingersoll Rand Inc. provides various mission-critical air, gas, liquid, and solid flow creation technologies services and solutions worldwide. It operates through two segments, Industrial Technologies and Services, and Precision and Science Technologies. The Industrial Technologies and Services segment designs, manufactures, markets, and services air and gas compression, vacuum, and blower products; fluid transfer equipment and loading systems; and power tools and lifting equipment, including associated aftermarket parts, consumables, air treatment equipment, controls, other accessories, and services under the under the Ingersoll Rand, Gardner Denver, Nash, CompAir, Elmo Rietschle brands, etc. The Precision and Science Technologies segment designs, manufactures, and markets diaphragm, piston, water-powered, peristaltic, gear, vane, progressive cavity, and syringe pumps; and gas boosters, hydrogen compression systems, automated liquid handling systems, odorant injection systems, controls, software, and other related components and accessories for liquid and gas dosing, transfer, dispensing, compression, sampling, pressure management, and flow control in specialized or critical applications under the Air Dimensions, Albin, ARO, Dosatron, Haskel, Ingersoll Rand, LMI, Maximus, Milton Roy, MP, Oberdorfer, Seepex, Thomas, Welch, Williams, YZ, and Zinnser Analytic brand names. This segment's products are used in medical, life sciences, industrial manufacturing, water and wastewater, chemical processing, energy, food and beverage, agriculture, and other markets. It sells through an integrated network of direct sales representatives and independent distributors. The company was formerly known as Gardner Denver Holdings, Inc. and changed its name to Ingersoll Rand Inc. in March 2020. Ingersoll Rand Inc. was founded in 1859 and is headquartered in Davidson, North Carolina.