Tennant (NYSE:TNC) versus IHI (OTCMKTS:IHICY) Financial Survey

IHI (OTCMKTS:IHICY) and Tennant (NYSE:TNC) are both industrials companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Institutional and Insider Ownership

93.3% of Tennant shares are held by institutional investors. 2.6% of Tennant shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

IHI pays an annual dividend of $0.08 per share and has a dividend yield of 0.4%. Tennant pays an annual dividend of $1.24 per share and has a dividend yield of 1.9%. IHI pays out 11.4% of its earnings in the form of a dividend. Tennant pays out 53.0% 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. Tennant has raised its dividend for 53 consecutive years. Tennant is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

IHI has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, Tennant has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
IHI	6.50%	21.69%	4.70%
Tennant	3.64%	16.05%	8.19%

Analyst Ratings

This is a summary of recent recommendations and price targets for IHI and Tennant, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
IHI	0	2	0	0	2.00
Tennant	1	2	1	0	2.00

Tennant has a consensus price target of $91.00, indicating a potential upside of 36.45%. Given Tennant’s higher possible upside, analysts clearly believe Tennant is more favorable than IHI.

Valuation and Earnings

This table compares IHI and Tennant”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IHI	$10.68 billion	2.14	$744.08 million	$0.70	30.17
Tennant	$1.20 billion	1.00	$43.80 million	$2.34	28.50

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

Summary

Tennant beats IHI on 9 of the 16 factors compared between the two stocks.

About IHI

IHI Corporation designs and builds engineering solutions in Japan and internationally. The company operates through four segments: Resources, Energy and Environment; Social Infrastructure; Industrial Systems and General-Purpose Machinery; and Aero Engine, Space and Defense. The company engages in the manufacturing, sale, and provision of services related to power systems plants for land use and power systems for chips; carbon solutions comprising boilers and storage facilities; components for nuclear power plants; bridges and water gates, transport systems, shield systems, and concrete construction materials; vehicular turbochargers, parking, heat treatment and surface engineering; transport machineries; logistics and industrial systems; and rotating machineries comprising compressors, separation systems, and turbochargers for ships. It also offers 3D laser radars, X-ray inspection systems, monitoring equipment, oil leak monitors, vibration control systems and seismic isolation floor systems, and disaster prevention equipment; environmental monitoring; cryogenic products, material handling systems, steelmaking equipment, pulp and paper machinery, agricultural machinery, life associated equipment; aero engines; rocket, space utilization, defense, and traffic control systems; and communication, electronic, electric measuring, information processing machines, and other instruments and equipment. In addition, the company sells and rents real estate. The company was formerly known as Ishikawajima-Harima Heavy Industries Co., Ltd and changed its name to IHI Corporation in 2007. IHI Corporation was founded in 1853 and is headquartered in Tokyo, Japan.

About Tennant

Tennant Company, together with its subsidiaries, designs, manufactures, and markets floor cleaning equipment in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers a suite of products, including floor maintenance and cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair services, and asset management solutions. It provides business solutions, such as financing, rental, and leasing programs, as well as machine-to-machine asset management solutions. The company offers its products under the Tennant, Nobles, Alfa Uma Empresa Tennant, IPC, Gaomei, and Rongen brands, as well as private-label brands. 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, and other environments. The company markets its products to contract cleaners and businesses through direct sales and service organizations, as well as through a network of authorized distributors. Tennant Company was founded in 1870 and is headquartered in Eden Prairie, Minnesota.