Comparing Gorman-Rupp (NYSE:GRC) & Tennant (NYSE:TNC)

Gorman-Rupp (NYSE:GRC) and Tennant (NYSE:TNC) are both small-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, analyst recommendations, earnings and risk.

Dividends

Gorman-Rupp pays an annual dividend of $0.76 per share and has a dividend yield of 1.0%. Tennant pays an annual dividend of $1.24 per share and has a dividend yield of 1.7%. Gorman-Rupp pays out 27.1% of its earnings in the form of a dividend. Tennant pays out 121.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gorman-Rupp has increased its dividend for 52 consecutive years and Tennant has increased 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 and Volatility

Gorman-Rupp has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500. Comparatively, Tennant has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Gorman-Rupp and Tennant, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gorman-Rupp	0	2	1	0	2.33
Tennant	1	2	1	0	2.00

Tennant has a consensus target price of $91.00, suggesting a potential upside of 25.97%. Given Tennant’s higher probable upside, analysts plainly believe Tennant is more favorable than Gorman-Rupp.

Valuation & Earnings

This table compares Gorman-Rupp 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
Gorman-Rupp	$682.39 million	2.90	$53.02 million	$2.80	26.74
Tennant	$1.20 billion	1.02	$43.80 million	$1.02	70.82

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

Institutional and Insider Ownership

59.3% of Gorman-Rupp shares are owned by institutional investors. Comparatively, 93.3% of Tennant shares are owned by institutional investors. 11.6% of Gorman-Rupp shares are owned by company insiders. Comparatively, 3.5% of Tennant 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.

Profitability

This table compares Gorman-Rupp and Tennant’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gorman-Rupp	10.20%	17.13%	8.61%
Tennant	1.85%	13.25%	5.81%

Summary

Gorman-Rupp beats Tennant on 10 of the 16 factors compared between the two stocks.

About Gorman-Rupp

The Gorman-Rupp Company designs, manufactures, and sells pumps and pump systems in the United States and internationally. The company’s products include self-priming centrifugal, standard centrifugal, magnetic drive centrifugal, axial and mixed flow, vertical turbine line shaft, submersible, high-pressure booster, rotary gear, diaphragm, bellows, and oscillating pumps. Its products are used in water, wastewater, construction, dewatering, industrial, petroleum, original equipment, agriculture, fire suppression, heating, ventilating and air conditioning, military, and other liquid-handling applications. The company markets its products through a network of distributors, manufacturers’ representatives, third-party distributor catalogs, direct sales, and e-commerce. The Gorman-Rupp Company was founded in 1933 and is headquartered in Mansfield, Ohio.

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.