Critical Contrast: Regal Rexnord (NYSE:RRX) and LeGrand (OTCMKTS:LGRDY)

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

Dividends

Regal Rexnord pays an annual dividend of $1.40 per share and has a dividend yield of 0.9%. LeGrand pays an annual dividend of $0.34 per share and has a dividend yield of 1.1%. Regal Rexnord pays out 28.9% of its earnings in the form of a dividend. LeGrand pays out 29.3% 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.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Regal Rexnord	0	3	8	0	2.73
LeGrand	0	5	5	1	2.64

Regal Rexnord presently has a consensus target price of $244.92, suggesting a potential upside of 62.09%. Given Regal Rexnord’s stronger consensus rating and higher probable upside, equities analysts clearly believe Regal Rexnord is more favorable than LeGrand.

Risk & Volatility

Regal Rexnord has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500. Comparatively, LeGrand has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Regal Rexnord	5.35%	9.93%	4.91%
LeGrand	13.01%	17.74%	7.34%

Institutional & Insider Ownership

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

Valuation & Earnings

This table compares Regal Rexnord and LeGrand”s gross 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	1.70	$279.50 million	$4.85	31.16
LeGrand	$10.72 billion	3.81	$1.41 billion	$1.16	26.85

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

Summary

Regal Rexnord beats LeGrand on 9 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 LeGrand

Legrand SA, together with its subsidiaries, manufactures, distributes, and sells electrical and digital building infrastructures in Europe, North and Central America, and internationally. The company offers energy distribution, protection, and management solutions, such as electric vehicle charging, residential and small commercial panels, switchboards and power cabinets, and UPS devices; and wiring devices, connected home and building control solutions, and guestroom solutions, as well as back, junction, DCL, and floor boxes. It also provides security, communication, and network solutions, including access security, digital home networks, emergency lighting, fire alarms, IT networks, intercom and door entry, and nurse call systems; conduits and cable management solutions comprising trunking, ducts, tubes, floor boxes, columns and feeders, and workstation solutions; industrial products, such as enclosures, connections, transformers and power supply, marking accessories and cable ties, motor control and protection, fuse protection, and industrial plugs and sockets, as well as control, button, and signaling products; installation accessories, including wiring accessories, extension cords, multi-outlet units, cable ties and fasteners, and connection boxes and terminals; and lighting products and accessories. The company's products are used in hotels, offices, data centers, shopping centers, health care, industrial, and residential buildings. It also exports its products to approximately 170 countries. Legrand SA was founded in 1865 and is headquartered in Limoges, France.