Trane Technologies (NYSE:TT) versus AAON (NASDAQ:AAON) Financial Contrast

Trane Technologies (NYSE:TT) and AAON (NASDAQ:AAON) are both construction companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, dividends and risk.

Dividends

Trane Technologies pays an annual dividend of $3.76 per share and has a dividend yield of 0.9%. AAON pays an annual dividend of $0.40 per share and has a dividend yield of 0.5%. Trane Technologies pays out 29.8% of its earnings in the form of a dividend. AAON pays out 27.2% 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. Trane Technologies has raised its dividend for 5 consecutive years and AAON has raised its dividend for 2 consecutive years. Trane Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Trane Technologies has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, AAON has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for Trane Technologies and AAON, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trane Technologies	1	10	5	0	2.25
AAON	0	0	4	1	3.20

Trane Technologies currently has a consensus price target of $458.60, indicating a potential upside of 7.58%. AAON has a consensus price target of $102.00, indicating a potential upside of 20.44%. Given AAON’s stronger consensus rating and higher possible upside, analysts plainly believe AAON is more favorable than Trane Technologies.

Valuation & Earnings

This table compares Trane Technologies and AAON”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trane Technologies	$19.84 billion	4.78	$2.57 billion	$12.61	33.80
AAON	$1.26 billion	5.49	$168.56 million	$1.47	57.61

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

Institutional and Insider Ownership

83.0% of Trane Technologies shares are owned by institutional investors. Comparatively, 70.8% of AAON shares are owned by institutional investors. 0.1% of Trane Technologies shares are owned by insiders. Comparatively, 18.5% of AAON shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Trane Technologies and AAON’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trane Technologies	13.76%	36.61%	13.58%
AAON	9.70%	15.45%	10.30%

Summary

Trane Technologies beats AAON on 11 of the 18 factors compared between the two stocks.

About Trane Technologies

Trane Technologies plc, together with its subsidiaries, designs, manufactures, sells, and services of solutions for heating, ventilation, air conditioning, custom, and custom and transport refrigeration in Ireland and internationally. It offers air conditioners, exchangers, and handlers; airside and terminal devices; air sourced heat pumps, auxiliary power units; chillers; coils and condensers; gensets; dehumidifiers; ductless; furnaces; home automation products; humidifiers; indoor air quality assessments and related products; large and light commercial unitary products; refrigerant reclamation products; thermostats/controls; transport heater products; variable refrigerant flow products; and water source heat pumps. The company also provides building management, telematic, control, energy efficiency and infrastructure program, geothermal, thermal energy, thermostats, rate chambers, package heating and cooling, temporary heating and cooling, and unitary systems; bus, rail, and multi-pipe heating, ventilation, and air conditioning systems; and container, diesel-powered, truck, industrial, rail, self-powered truck, trailer, and vehicle-powered truck refrigeration and air filtration systems, as well as aftermarket and OEM parts and supplies. In addition, it offers energy and facility management, installation and performance contracting, repair and maintenance, and rental services. It markets and sells its products under the Trane and Thermo King brands through sales offices, distributors, and dealers; and through sales and service companies with a supporting chain of distributors. The company was formerly known as Ingersoll-Rand Plc and changed its name to Trane Technologies plc in March 2020. Trane Technologies plc was founded in 1885 and is headquartered in Swords, Ireland.

About AAON

AAON, Inc., together with its subsidiaries, engages in engineering, manufacturing, marketing, and selling air conditioning and heating equipment in the United States and Canada. The company operates through three segments: AAON Oklahoma, AAON Coil Products, and BASX. It offers rooftop units, data center cooling solutions, cleanroom systems, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls. The company markets and sells its products to retail, manufacturing, educational, lodging, supermarket, data centers, medical and pharmaceutical, and other commercial industries. It sells its products through a network of independent manufacturer representative organizations and internal sales force, as well as online. The company was incorporated in 1987 and is based in Tulsa, Oklahoma.