Analyzing Powell Industries (NASDAQ:POWL) and Regal Rexnord (NYSE:RRX)

Regal Rexnord (NYSE:RRX) and Powell Industries (NASDAQ:POWL) are both industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, dividends, valuation and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and recommmendations for Regal Rexnord and Powell Industries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Regal Rexnord	0	3	8	0	2.73
Powell Industries	0	3	2	2	2.86

Regal Rexnord presently has a consensus price target of $244.92, indicating a potential upside of 60.46%. Powell Industries has a consensus price target of $215.42, indicating a potential upside of 12.25%. Given Regal Rexnord’s higher possible upside, equities analysts clearly believe Regal Rexnord is more favorable than Powell Industries.

Profitability

This table compares Regal Rexnord and Powell Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Regal Rexnord	5.35%	9.93%	4.91%
Powell Industries	16.49%	27.51%	15.94%

Institutional & Insider Ownership

99.7% of Regal Rexnord shares are owned by institutional investors. Comparatively, 89.8% of Powell Industries shares are owned by institutional investors. 0.6% of Regal Rexnord shares are owned by company insiders. Comparatively, 2.2% of Powell Industries shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Regal Rexnord pays an annual dividend of $1.40 per share and has a dividend yield of 0.9%. Powell Industries pays an annual dividend of $0.36 per share and has a dividend yield of 0.2%. Regal Rexnord pays out 28.9% of its earnings in the form of a dividend. Powell Industries pays out 6.9% 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. Powell Industries has raised its dividend for 3 consecutive years.

Valuation and Earnings

This table compares Regal Rexnord and Powell Industries”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Regal Rexnord	$5.93 billion	1.71	$279.50 million	$4.85	31.47
Powell Industries	$1.10 billion	6.33	$180.75 million	$5.21	36.83

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

Volatility & Risk

Regal Rexnord has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500. Comparatively, Powell Industries has a beta of 1.18, indicating that its share price is 18% more volatile than the S&P 500.

Summary

Powell Industries beats Regal Rexnord on 12 of the 18 factors compared between the two stocks.

About Regal Rexnord

Regal Rexnord Corporation manufactures and sells industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems worldwide. The Industrial Powertrain Solutions segment provides mounted and unmounted bearings, couplings, mechanical power transmission drives and components, gearboxes, gear motors, clutches, brakes, special, and industrial powertrain components and solutions for food and beverage, bulk material handling, eCommerce/warehouse distribution, energy, mining, marine, agricultural machinery, turf and garden, and general industrial markets. The Power Efficiency Solutions segment offers AC and DC motors, electronic variable speed controls, and blowers for residential, commercial HVAC, water heaters, commercial refrigeration, commercial building ventilation, pool and spa, irrigation, agriculture, conveying, and general commercial equipment markets. The Automation and Motion Control segment provides conveyor products, conveying automation subsystems, aerospace components, rotary precision motion solutions, high-efficiency miniature motors, motion controls, automation transfer switches, and switchgear for industrial applications and automation systems for material handling, aerospace and defense, factory automation, data centers, medical device, packaging, printing, semiconductor, robotic, industrial power tool, mobile off-highway, food and beverage processing, and other applications. The Industrial Systems segment offers integral motors, alternators, and aftermarket parts and kits for agriculture, marine, mining, oil and gas, food and beverage, data centers, prime and standby power, and general industrial equipment markets. It sells its products directly to original equipment manufacturers, distributors, and end-users. The company was formerly known as Regal Beloit Corporation. The company was founded in 1955 and is based in Milwaukee, Wisconsin.

About Powell Industries

Powell Industries, Inc., together with its subsidiaries, designs, develops, manufactures, sells, and services custom-engineered equipment and systems. The company’s principal products include integrated power control room substations, custom-engineered modules, electrical houses, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches, and bus duct systems, as well as traditional and arc-resistant distribution switchgears and control gears. Its products have application in voltages ranging from 480 volts to 38,000 volts. The company also provide field service inspection, installation, commissioning, modification and repair, spare parts, retrofit and retrofill components for existing systems, and replacement circuit breakers for switchgear. It serves onshore and offshore production, liquefied natural gas facilities and terminals, pipelines, refineries, and petrochemical plants, as well as electric utility, light rail traction power, mining and metals, pulp and paper, data centers and other municipal, commercial, and industrial markets. The company has operations in the United States, Canada, the Middle East, Africa, Europe, Mexico, and Central and South America. Powell Industries, Inc. was founded in 1947 and is headquartered in Houston, Texas.