Critical Review: Nordson Corporation (NDSN) & Tennant (NYSE:TNC)

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

Analyst Ratings

This is a summary of recent ratings and price targets for Nordson Corporation and Tennant, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nordson Corporation 0 5 6 0 2.55
Tennant 0 2 0 0 2.00

Nordson Corporation currently has a consensus price target of $113.00, indicating a potential downside of 11.50%. Tennant has a consensus price target of $65.00, indicating a potential upside of 3.09%. Given Tennant’s higher possible upside, analysts plainly believe Tennant is more favorable than Nordson Corporation.

Valuation & Earnings

This table compares Nordson Corporation and Tennant’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nordson Corporation $1.90 billion 3.87 $497.39 million $4.74 26.94
Tennant $873.73 million 1.28 $91.61 million $1.12 56.29

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

Profitability

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

Net Margins Return on Equity Return on Assets
Nordson Corporation 14.43% 33.39% 11.08%
Tennant 2.32% 15.39% 7.19%

Institutional & Insider Ownership

66.4% of Nordson Corporation shares are owned by institutional investors. Comparatively, 90.0% of Tennant shares are owned by institutional investors. 2.2% of Nordson Corporation shares are owned by insiders. Comparatively, 5.7% of Tennant shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Nordson Corporation pays an annual dividend of $1.08 per share and has a dividend yield of 0.8%. Tennant pays an annual dividend of $0.84 per share and has a dividend yield of 1.3%. Nordson Corporation pays out 22.8% of its earnings in the form of a dividend. Tennant pays out 75.0% 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. Nordson Corporation has increased its dividend for 45 consecutive years and Tennant has increased its dividend for 3 consecutive years.

Risk & Volatility

Nordson Corporation has a beta of 1.35, suggesting that its stock price is 35% more 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.

Summary

Nordson Corporation beats Tennant on 12 of the 17 factors compared between the two stocks.

Nordson Corporation Company Profile

Nordson Corporation engineers, manufactures and markets differentiated products and systems used to dispense, apply and control adhesives, coatings, polymers, sealants, biomaterials, and other fluids, to test and inspect for quality, and to treat and cure surfaces. The Company’s segments include Adhesive Dispensing Systems, Advanced Technology Systems and Industrial Coating Systems. The Adhesive Dispensing Systems segment delivers its precision dispensing and processing technology to various markets. The Advanced Technology Systems segment integrates its product technologies found in progressive stages of a customer’s production process, such as surface treatment, precisely controlled automated, and post-dispense bond testing, optical inspection and X-ray inspection. The Industrial Coating Systems segment provides equipment used primarily for applying coatings, paint, finishes, sealants and other materials, and for curing and drying of dispensed material.

Tennant Company Profile

Tennant Company is engaged in designing, manufacturing and marketing of cleaning solutions. The Company’s segments are Americas; Europe, Middle East, Africa, and Asia Pacific. The Company offers a range of products, including floor maintenance and outdoor cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair service, specialty surface coatings and asset management solutions. Its products are used in various types of environments, including retail establishments, distribution centers, factories and warehouses, public venues such as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, parking lots and streets. The Company markets and sells its products under various brands: Tennant, Nobles, Green Machines, Alfa Uma Empresa Tennant, IRIS, Orbio IPC, IPC Foma, IPC Eagle, IPC Gansow, ICA, Vaclensa, Portotecnica, Sirio and Soteco, Ready System, Euromop, and Pulex.

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