Head to Head Review: Kadant (KAI) and Tennant (TNC)
Kadant (NYSE: KAI) and Tennant (NYSE:TNC) are both small-cap industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.
Kadant pays an annual dividend of $0.84 per share and has a dividend yield of 0.8%. Tennant pays an annual dividend of $0.84 per share and has a dividend yield of 1.2%. Kadant pays out 27.7% of its earnings in the form of a dividend. Tennant pays out 75.0% 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. Kadant has increased its dividend for 3 consecutive years and Tennant has increased its dividend for 45 consecutive years. Tennant is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Kadant has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500. Comparatively, Tennant has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500.
Valuation and Earnings
This table compares Kadant and Tennant’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Kadant||$418.86 million||2.67||$67.05 million||$3.03||33.55|
|Tennant||$873.73 million||1.42||$91.45 million||$1.12||62.10|
Tennant has higher revenue and earnings than Kadant. Kadant is trading at a lower price-to-earnings ratio than Tennant, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings for Kadant and Tennant, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Kadant currently has a consensus target price of $94.00, suggesting a potential downside of 7.53%. Tennant has a consensus target price of $65.00, suggesting a potential downside of 6.54%. Given Tennant’s higher possible upside, analysts clearly believe Tennant is more favorable than Kadant.
This table compares Kadant and Tennant’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
90.7% of Kadant shares are held by institutional investors. Comparatively, 89.4% of Tennant shares are held by institutional investors. 5.6% of Kadant shares are held by insiders. Comparatively, 5.7% of Tennant shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Kadant beats Tennant on 10 of the 17 factors compared between the two stocks.
Kadant Company Profile
Kadant Inc. is a supplier of equipment and components used in process industries. In addition, the Company manufactures granules made from papermaking by-products. Its segments include Papermaking Systems and Wood Processing Systems. The Company has a customer base, which includes paper and oriented strand board (OSB) manufacturers. Papermaking Systems segment is engaged in developing, manufacturing, and marketing equipment for the global papermaking and paper recycling industries. Its Papermaking Systems segment consists of product lines, including Stock-Preparation; Doctoring, Cleaning, & Filtration, and Fluid-Handling. The Company develops, manufactures and markets stranders and related equipment used in the production of OSB.
Tennant 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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