Reviewing Tennant (NYSE:TNC) & Otis Worldwide (NYSE:OTIS)

Otis Worldwide (NYSE:OTIS) 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 institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitability.

Earnings & Valuation

This table compares Otis Worldwide and Tennant”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Otis Worldwide	$14.43 billion	2.08	$1.38 billion	$3.50	22.01
Tennant	$1.20 billion	0.99	$43.80 million	$2.34	28.37

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Otis Worldwide and Tennant, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Otis Worldwide	1	6	3	0	2.20
Tennant	1	2	1	0	2.00

Otis Worldwide currently has a consensus price target of $101.44, suggesting a potential upside of 31.67%. Tennant has a consensus price target of $91.00, suggesting a potential upside of 37.08%. Given Tennant’s higher possible upside, analysts plainly believe Tennant is more favorable than Otis Worldwide.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Otis Worldwide	9.59%	-30.42%	14.84%
Tennant	3.64%	16.05%	8.19%

Insider & Institutional Ownership

88.0% of Otis Worldwide shares are owned by institutional investors. Comparatively, 93.3% of Tennant shares are owned by institutional investors. 0.2% of Otis Worldwide shares are owned by insiders. Comparatively, 3.5% of Tennant shares are owned by 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

Otis Worldwide pays an annual dividend of $1.68 per share and has a dividend yield of 2.2%. Tennant pays an annual dividend of $1.24 per share and has a dividend yield of 1.9%. Otis Worldwide pays out 48.0% 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. Otis Worldwide has increased its dividend for 5 consecutive years and Tennant has increased its dividend for 53 consecutive years. Otis Worldwide is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Otis Worldwide has a beta of 1, suggesting that its stock price has a similar volatility profile to 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.

Summary

Otis Worldwide beats Tennant on 10 of the 17 factors compared between the two stocks.

About Otis Worldwide

Otis Worldwide Corporation engages in manufacturing, installation, and servicing of elevators and escalators in the United States, China, and internationally. The company operates in two segments, New Equipment and Service. The New Equipment segment designs, manufactures, sells, and installs a range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings, and infrastructure projects. This segment serves real-estate and building developers, and general contractors. It sells its products directly to customers, as well as through agents and distributors. The Service segment performs maintenance and repair services, as well as modernization services to upgrade elevators and escalators. Otis Worldwide Corporation was founded in 1853 and is headquartered in Farmington, Connecticut.

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.