Critical Survey: Tennant (TNC) and Welbilt (WBT)

Tennant (NYSE: TNC) and Welbilt (NYSE:WBT) are both industrial products companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.

Institutional and Insider Ownership

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91.1% of Tennant shares are held by institutional investors. Comparatively, 89.9% of Welbilt shares are held by institutional investors. 5.6% of Tennant shares are held by insiders. Comparatively, 0.4% of Welbilt shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for Tennant and Welbilt, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tennant 0 0 1 0 3.00
Welbilt 0 3 5 0 2.63

Welbilt has a consensus price target of $23.40, suggesting a potential upside of 18.96%. Given Welbilt’s higher probable upside, analysts plainly believe Welbilt is more favorable than Tennant.

Profitability

This table compares Tennant and Welbilt’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tennant -0.62% 9.68% 3.24%
Welbilt 9.27% 312.48% 5.88%

Earnings and Valuation

This table compares Tennant and Welbilt’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tennant $1.00 billion 1.25 -$6.19 million $1.54 45.71
Welbilt $1.45 billion 1.90 $134.00 million $0.77 25.55

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

Dividends

Tennant pays an annual dividend of $0.84 per share and has a dividend yield of 1.2%. Welbilt does not pay a dividend. Tennant pays out 54.5% of its earnings in the form of a dividend. Tennant has raised its dividend for 46 consecutive years.

Volatility & Risk

Tennant has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Welbilt has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500.

Summary

Welbilt beats Tennant on 10 of the 17 factors compared between the two stocks.

About Tennant

Tennant Company designs, manufactures, and markets floor cleaning equipment. It offers a suite of products, including floor maintenance and outdoor cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair services, specialty surface coatings, and asset management solutions. The company also provides business solutions, such as financing, rental, and leasing programs, as well as machine-to-machine asset management solutions. 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, parking lots and streets, and other environments. The company markets its products to contract cleaners, businesses, and various governmental entities through direct sales and service organization, as well as through a network of authorized distributors under the Tennant, Nobles, Green Machines, Alfa Uma Empresa Tennant, IRIS, Superior Anodes, Waterstar, and Orbio brands worldwide. Tennant Company was founded in 1870 and is headquartered in Minneapolis, Minnesota.

About Welbilt

Welbilt, Inc., formerly Manitowoc Foodservice, Inc., is a commercial foodservice equipment company. The Company designs, manufactures and supplies food and beverage equipment for the global commercial foodservice market, offering customers operator and patron insights, kitchen solutions, culinary expertise, and implementation support and service. It operates through three segments: Americas, EMEA and APAC. The Americas segment includes the United States, Canada and Latin America. The EMEA segment consists of markets in Europe, Middle East and Africa, including Russia and the commonwealth of independent states. The APAC segment consists of markets in China, Singapore, Australia, India, Malaysia, Indonesia, Thailand and the Philippines. It supplies foodservice equipment to commercial and institutional foodservice operators. Its brands include Cleveland, Convotherm, Delfield, fitKitchen, Frymaster, Garland, Kolpak, Lincoln, Manitowoc Ice, Merco, Merrychef and Multiplex.

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