Critical Review: Spectrum Brands Holdings (SPB) vs. Regal Beloit Corporation (RBC)

Spectrum Brands Holdings (NYSE: SPB) and Regal Beloit Corporation (NYSE:RBC) are both mid-cap consumer staples companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, valuation, dividends and profitabiliy.

Profitability

This table compares Spectrum Brands Holdings and Regal Beloit Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Spectrum Brands Holdings 6.31% 17.78% 4.57%
Regal Beloit Corporation 6.46% 9.80% 4.62%

Volatility and Risk

Spectrum Brands Holdings has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, Regal Beloit Corporation has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500.

Institutional and Insider Ownership

47.9% of Spectrum Brands Holdings shares are held by institutional investors. Comparatively, 94.1% of Regal Beloit Corporation shares are held by institutional investors. 1.0% of Spectrum Brands Holdings shares are held by insiders. Comparatively, 2.2% of Regal Beloit Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Spectrum Brands Holdings and Regal Beloit Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Spectrum Brands Holdings $4.99 billion 1.56 $897.00 million $5.30 25.01
Regal Beloit Corporation $3.22 billion 1.14 $500.30 million $4.61 17.72

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

Analyst Ratings

This is a summary of current ratings for Spectrum Brands Holdings and Regal Beloit Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Spectrum Brands Holdings 0 1 7 0 2.88
Regal Beloit Corporation 0 5 3 0 2.38

Spectrum Brands Holdings currently has a consensus price target of $151.29, indicating a potential upside of 14.14%. Regal Beloit Corporation has a consensus price target of $72.33, indicating a potential downside of 11.46%. Given Spectrum Brands Holdings’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Spectrum Brands Holdings is more favorable than Regal Beloit Corporation.

Dividends

Spectrum Brands Holdings pays an annual dividend of $1.68 per share and has a dividend yield of 1.3%. Regal Beloit Corporation pays an annual dividend of $0.96 per share and has a dividend yield of 1.2%. Spectrum Brands Holdings pays out 31.7% of its earnings in the form of a dividend. Regal Beloit Corporation pays out 20.8% 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. Spectrum Brands Holdings has increased its dividend for 7 consecutive years and Regal Beloit Corporation has increased its dividend for 3 consecutive years. Spectrum Brands Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Spectrum Brands Holdings beats Regal Beloit Corporation on 11 of the 17 factors compared between the two stocks.

Spectrum Brands Holdings Company Profile

Spectrum Brands Holdings, Inc. (SB Holdings) is a diversified global consumer products company. The Company manufactures, markets and/or distributes its products in approximately 160 countries in the North America (NA); Europe, the Middle East and Africa (EMEA); Latin America (LATAM), and Asia-Pacific (APAC) regions. It has five segments: Global Batteries & Appliances (GBA), Global Pet Supplies (PET), Home and Garden (H&G), Hardware & Home Improvement (HHI) and Global Auto Care (GAC). The Company’s GBA segment includes product categories, such as consumer batteries, small appliances and personal care. The Company’s HHI segment includes product categories, such as lockset, plumbing and hardware. The Company’s PET segment’s product categories include aquatics, companion animal and pet food. The Company’s H&G segment’s product categories include controls, household and repellents. The Company’s GAC segment’s product categories include appearance, performance and A/C recharge.

Regal Beloit Corporation Company Profile

Regal Beloit Corporation is a manufacturer of electric motors, electrical motion controls, power generation and power transmission products. The Company operates through three segments: the Commercial and Industrial Systems segment, with its principal line of business in medium and large electric motors, power generation products, high-performance drives and controls and capacitors; the Climate Solutions segment, with its principal line of business in small motors, controls and air moving products, and the Power Transmission Solutions segment, with its principal line of business in power transmission gearing, hydraulic pump drives, open gearing and specialty mechanical products which control motion and torque. It sells its products directly to original equipment manufacturers (OEMs), distributors and end users. It operates distribution facilities in Plainfield, Indiana; McAllen, Texas; LaVergne, Tennessee, and Florence, Kentucky.

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