Head to Head Survey: Kadant (NYSE:KAI) and Gorman-Rupp (NYSE:GRC)

Gorman-Rupp (NYSE:GRC) and Kadant (NYSE:KAI) are both industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, institutional ownership, earnings and profitability.

Profitability

This table compares Gorman-Rupp and Kadant’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gorman-Rupp	7.77%	14.06%	6.52%
Kadant	9.69%	11.57%	7.09%

Risk & Volatility

Gorman-Rupp has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500. Comparatively, Kadant has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Gorman-Rupp and Kadant, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gorman-Rupp	0	0	1	0	3.00
Kadant	0	2	1	0	2.33

Kadant has a consensus price target of $341.50, indicating a potential upside of 6.01%. Given Kadant’s higher probable upside, analysts clearly believe Kadant is more favorable than Gorman-Rupp.

Institutional and Insider Ownership

59.3% of Gorman-Rupp shares are held by institutional investors. Comparatively, 96.1% of Kadant shares are held by institutional investors. 7.4% of Gorman-Rupp shares are held by company insiders. Comparatively, 1.4% of Kadant shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Gorman-Rupp and Kadant”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gorman-Rupp	$682.39 million	2.28	$53.02 million	$2.01	29.45
Kadant	$1.05 billion	3.61	$101.97 million	$8.65	37.24

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

Dividends

Gorman-Rupp pays an annual dividend of $0.76 per share and has a dividend yield of 1.3%. Kadant pays an annual dividend of $1.36 per share and has a dividend yield of 0.4%. Gorman-Rupp pays out 37.8% of its earnings in the form of a dividend. Kadant pays out 15.7% 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. Gorman-Rupp has increased its dividend for 52 consecutive years and Kadant has increased its dividend for 12 consecutive years. Gorman-Rupp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Kadant beats Gorman-Rupp on 10 of the 16 factors compared between the two stocks.

About Gorman-Rupp

The Gorman-Rupp Company designs, manufactures, and sells pumps and pump systems in the United States and internationally. The company’s products include self-priming centrifugal, standard centrifugal, magnetic drive centrifugal, axial and mixed flow, vertical turbine line shaft, submersible, high-pressure booster, rotary gear, diaphragm, bellows, and oscillating pumps. Its products are used in water, wastewater, construction, dewatering, industrial, petroleum, original equipment, agriculture, fire suppression, heating, ventilating and air conditioning, military, and other liquid-handling applications. The company markets its products through a network of distributors, manufacturers’ representatives, third-party distributor catalogs, direct sales, and e-commerce. The Gorman-Rupp Company was founded in 1933 and is headquartered in Mansfield, Ohio.

About Kadant

Kadant Inc. supplies technologies and engineered systems worldwide. It operates in three segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment develops, manufactures, and markets fluid-handling systems and equipment, such as rotary joints, syphons, turbulator bars, expansion joints, and engineered steam and condensate systems; and doctoring, cleaning, and filtration systems and related consumables consisting of doctor systems and holders, doctor blades, cleaning shower and fabric-conditioning systems, forming systems and wear surfaces, and water-filtration systems. The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, engineered knife systems, industrial automation and control, recycling and approach flow systems, and virgin pulping process equipment for use in the packaging, tissue, wood products, and alternative fuel industries. The Material Handling segment offers conveying and vibratory equipment, and baling products; and manufactures and sells biodegradable absorbent granules for carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. The company markets and sells its products, services, and systems through direct sales, independent sales agents, and distributors. The company was formerly known as Thermo Fibertek, Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was incorporated in 1991 and is headquartered in Westford, Massachusetts.