Altra Industrial Motion Corp. (NASDAQ: AIMC) and Tennant Company (NYSE:TNC) are both small-cap industrial products companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, analyst recommendations, profitabiliy, earnings, dividends and risk.

Dividends

Altra Industrial Motion Corp. pays an annual dividend of $0.60 per share and has a dividend yield of 1.4%. Tennant Company pays an annual dividend of $0.84 per share and has a dividend yield of 1.1%. Altra Industrial Motion Corp. pays out 61.2% of its earnings in the form of a dividend. Tennant Company pays out 39.6% 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 Company has raised its dividend for 45 consecutive years.

Risk & Volatility

Altra Industrial Motion Corp. has a beta of 1.56, suggesting that its share price is 56% more volatile than the S&P 500. Comparatively, Tennant Company has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500.

Valuation & Earnings

This table compares Altra Industrial Motion Corp. and Tennant Company’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Altra Industrial Motion Corp. $743.89 million 1.72 $103.11 million $0.98 44.44
Tennant Company $819.77 million 1.61 $88.46 million $2.12 34.88

Altra Industrial Motion Corp. has higher revenue, but lower earnings than Tennant Company. Tennant Company is trading at a lower price-to-earnings ratio than Altra Industrial Motion Corp., indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for Altra Industrial Motion Corp. and Tennant Company, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Altra Industrial Motion Corp. 0 1 2 0 2.67
Tennant Company 0 3 0 0 2.00

Altra Industrial Motion Corp. currently has a consensus price target of $44.50, suggesting a potential upside of 2.18%. Tennant Company has a consensus price target of $65.00, suggesting a potential downside of 12.10%. Given Altra Industrial Motion Corp.’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Altra Industrial Motion Corp. is more favorable than Tennant Company.

Profitability

This table compares Altra Industrial Motion Corp. and Tennant Company’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Altra Industrial Motion Corp. 3.58% 16.20% 6.14%
Tennant Company 4.66% 17.52% 10.46%

Insider & Institutional Ownership

98.3% of Altra Industrial Motion Corp. shares are owned by institutional investors. Comparatively, 88.2% of Tennant Company shares are owned by institutional investors. 3.2% of Altra Industrial Motion Corp. shares are owned by insiders. Comparatively, 5.7% of Tennant Company shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Tennant Company beats Altra Industrial Motion Corp. on 9 of the 17 factors compared between the two stocks.

Altra Industrial Motion Corp. Company Profile

Altra Industrial Motion Corp. is a designer, producer and marketer of a range of mechanical power transmission (MPT) components. The Company operates through three segments: Couplings, Clutches and Brakes; Electromagnetic Clutches and Brakes, and Gearing. It manufactures a range of couplings suitable for various industrial and specialty applications. The Electromagnetic Clutches and Brakes segment products include brakes and clutches that are used to electronically slow, stop, engage or disengage equipment utilizing electromagnetic friction type connections. The Gearing segment product lines include vertical and horizontal gear drives, speed reducers and increasers, high-speed compressor drives, enclosed custom gear drives, various enclosed gear drive and gear motor configurations, and open gearing products, such as spur, helical, worm and miter/bevel gears. Its products are used to control and transmit power and torque in virtually any industrial application involving movement.

Tennant Company Company Profile

Tennant Company is engaged in designing, manufacturing and marketing of cleaning solutions. The Company’s segments are Americas; Europe, Middle East, Africa, and Asia Pacific. The Company offers a range of products, including floor maintenance and outdoor cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair service, specialty surface coatings and asset management solutions. Its products are used in various types of environments, including retail establishments, distribution centers, factories and warehouses, public venues such as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, parking lots and streets. The Company markets and sells its products under various brands: Tennant, Nobles, Green Machines, Alfa Uma Empresa Tennant, IRIS, Orbio IPC, IPC Foma, IPC Eagle, IPC Gansow, ICA, Vaclensa, Portotecnica, Sirio and Soteco, Ready System, Euromop, and Pulex.

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