Financial Review: Middleby (NASDAQ:MIDD) versus Tennant (TNC)

Tennant (NYSE: TNC) and Middleby (NASDAQ:MIDD) are both industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Analyst Recommendations

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This is a summary of recent ratings and price targets for Tennant and Middleby, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tennant 0 0 1 0 3.00
Middleby 0 4 4 0 2.50



Middleby has a consensus target price of $138.71, indicating a potential upside of 13.30%. Given Middleby’s higher possible upside, analysts clearly believe Middleby is more favorable than Tennant.

Dividends

Tennant pays an annual dividend of $0.84 per share and has a dividend yield of 1.2%. Middleby does not pay a dividend. Tennant pays out 54.5% of its earnings in the form of a dividend. Tennant has increased its dividend for 46 consecutive years.

Earnings and Valuation

This table compares Tennant and Middleby’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tennant $1.00 billion 1.22 -$6.19 million $1.54 44.51
Middleby $2.34 billion 2.92 $298.12 million $6.16 19.88

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

Volatility and Risk

Tennant has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Middleby has a beta of 1.8, suggesting that its stock price is 80% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Tennant -0.62% 9.68% 3.24%
Middleby 12.77% 22.98% 9.87%

Insider & Institutional Ownership

91.1% of Tennant shares are held by institutional investors. 5.6% of Tennant shares are held by insiders. Comparatively, 1.9% of Middleby shares are held 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.

Summary

Middleby beats Tennant on 11 of the 17 factors compared between the two stocks.

About Tennant

Tennant Company designs, manufactures, and markets floor cleaning equipment. It offers a suite of products, including floor maintenance and outdoor cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair services, specialty surface coatings, and asset management solutions. The company also provides business solutions, such as financing, rental, and leasing programs, as well as machine-to-machine asset management solutions. 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, parking lots and streets, and other environments. The company markets its products to contract cleaners, businesses, and various governmental entities through direct sales and service organization, as well as through a network of authorized distributors under the Tennant, Nobles, Green Machines, Alfa Uma Empresa Tennant, IRIS, Superior Anodes, Waterstar, and Orbio brands worldwide. Tennant Company was founded in 1870 and is headquartered in Minneapolis, Minnesota.

About Middleby

The Middleby Corporation is engaged in the design, manufacture and sale of commercial foodservice, food processing equipment and residential kitchen equipment. The Company operates in three segments: the Commercial Foodservice Equipment Group, the Food Processing Equipment Group and the Residential Kitchen Equipment Group. It is also engaged in the design, manufacture, marketing, distribution and service of a range of foodservice equipment used in commercial restaurants and institutional kitchens; food preparation, cooking, baking, chilling and packaging equipment for food processing operations, and kitchen equipment, including ranges, ovens, refrigerators, ventilation and dishwashers used in the residential market. It manufactured and assembled the equipment at 28 facilities in the United States, and 23 international manufacturing facilities as of December 31, 2016. Its brands include Anets, Beech, Blodgett, Blodgett Combi, Stewart Systems, Mercury, Rangemaster, Rayburn and Redfyre.

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