Analyzing Acuity (NYSE:AYI) and Regal Rexnord (NYSE:RRX)

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

Dividends

Acuity pays an annual dividend of $0.80 per share and has a dividend yield of 0.3%. Regal Rexnord pays an annual dividend of $1.40 per share and has a dividend yield of 0.9%. Acuity pays out 4.7% of its earnings in the form of a dividend. Regal Rexnord pays out 28.9% 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. Acuity has increased its dividend for 3 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Acuity	11.45%	20.30%	12.43%
Regal Rexnord	5.35%	9.93%	4.91%

Volatility and Risk

Acuity has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, Regal Rexnord has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Insider & Institutional Ownership

98.2% of Acuity shares are owned by institutional investors. Comparatively, 99.7% of Regal Rexnord shares are owned by institutional investors. 2.9% of Acuity shares are owned by insiders. Comparatively, 0.6% of Regal Rexnord shares are owned 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.

Valuation and Earnings

This table compares Acuity and Regal Rexnord”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Acuity	$4.64 billion	1.92	$531.30 million	$17.10	17.41
Regal Rexnord	$5.93 billion	1.80	$279.50 million	$4.85	33.03

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Acuity and Regal Rexnord, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Acuity	0	5	3	0	2.38
Regal Rexnord	0	3	8	0	2.73

Acuity presently has a consensus target price of $390.20, suggesting a potential upside of 31.03%. Regal Rexnord has a consensus target price of $243.75, suggesting a potential upside of 52.17%. Given Regal Rexnord’s stronger consensus rating and higher probable upside, analysts clearly believe Regal Rexnord is more favorable than Acuity.

Summary

Acuity beats Regal Rexnord on 10 of the 17 factors compared between the two stocks.

About Acuity

Acuity Brands, Inc. provides lighting, lighting controls, building management system, location-aware applications in the United States and internationally. The company operates in two segments, Acuity Brands Lighting and Lighting Controls (ABL); and the Intelligent Spaces Group (ISG). The ABL segment provides commercial, architectural, and specialty lighting solutions, as well as lighting controls and components for various indoor and outdoor applications under the A-Light, Aculux, American Electric Lighting, Cyclone, Dark to Light, eldoLED, Eureka, Gotham, Healthcare Lighting, Holophane, Hydrel, Indy, IOTA, Juno, Lithonia Lighting, Luminaire LED, Luminis, Mark Architectural Lighting, nLight, OPTOTRONIC, Peerless, RELOCWiring Solutions, and Sensor Switch. This segment serves electrical distributors, retail home improvement centers, electric utilities, national accounts, original equipment manufacturers, digital retailers, lighting showrooms, and energy service companies. The ISG segment offers building management solutions, such as products for controlling heating, ventilation, air conditioning, lighting, shades, refrigeration, and building access that deliver end-to-end optimization of those building systems; and building management software that enhances building system management and automates labor intensive tasks. This segment serves system integrators, as well as retail stores, airports, and enterprise campuses. The company offers its products and solutions under the Atrius, Distech Controls, and KE2 Therm Solutions brands. Acuity Brands, Inc. was incorporated in 2001 and is headquartered in Atlanta, Georgia.

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.