Regal Rexnord (NYSE:RRX) & Gates Industrial (NYSE:GTES) Critical Comparison

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gates Industrial	7.23%	10.00%	5.15%
Regal Rexnord	4.78%	9.49%	4.65%

Earnings and Valuation

This table compares Gates Industrial 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
Gates Industrial	$3.44 billion	1.89	$251.40 million	$0.96	26.69
Regal Rexnord	$5.93 billion	2.30	$279.50 million	$4.30	47.71

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

Insider and Institutional Ownership

98.5% of Gates Industrial shares are held by institutional investors. Comparatively, 99.7% of Regal Rexnord shares are held by institutional investors. 2.8% of Gates Industrial shares are held by company insiders. Comparatively, 0.6% of Regal Rexnord shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Gates Industrial and Regal Rexnord, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gates Industrial	0	4	7	0	2.64
Regal Rexnord	0	3	6	0	2.67

Gates Industrial currently has a consensus target price of $31.00, indicating a potential upside of 20.99%. Regal Rexnord has a consensus target price of $232.25, indicating a potential upside of 13.21%. Given Gates Industrial’s higher probable upside, equities research analysts plainly believe Gates Industrial is more favorable than Regal Rexnord.

Volatility & Risk

Gates Industrial has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500. Comparatively, Regal Rexnord has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.

About Gates Industrial

Gates Industrial Corporation PLC designs and manufactures power transmission equipment. Its products serves harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation.

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.