Financial Survey: Tennant (NYSE:TNC) vs. Gorman-Rupp (NYSE:GRC)

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

Insider and Institutional Ownership

93.3% of Tennant shares are held by institutional investors. Comparatively, 59.3% of Gorman-Rupp shares are held by institutional investors. 3.5% of Tennant shares are held by insiders. Comparatively, 11.6% of Gorman-Rupp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Tennant and Gorman-Rupp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tennant	0	2	1	1	2.75
Gorman-Rupp	0	1	1	1	3.00

Tennant currently has a consensus price target of $91.00, suggesting a potential upside of 0.61%. Given Tennant’s higher probable upside, equities analysts plainly believe Tennant is more favorable than Gorman-Rupp.

Earnings & Valuation

This table compares Tennant and Gorman-Rupp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tennant	$1.20 billion	1.28	$43.80 million	$1.66	54.49
Gorman-Rupp	$682.39 million	3.40	$53.02 million	$2.23	39.42

Gorman-Rupp has lower revenue, but higher earnings 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tennant	2.55%	14.87%	7.17%
Gorman-Rupp	8.45%	15.08%	7.18%

Volatility and Risk

Tennant has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500. Comparatively, Gorman-Rupp has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500.

Dividends

Tennant pays an annual dividend of $1.24 per share and has a dividend yield of 1.4%. Gorman-Rupp pays an annual dividend of $0.76 per share and has a dividend yield of 0.9%. Tennant pays out 74.7% of its earnings in the form of a dividend. Gorman-Rupp pays out 34.1% 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 and Gorman-Rupp has raised its dividend for 52 consecutive years. Tennant is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Gorman-Rupp beats Tennant on 10 of the 16 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 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.