Critical Analysis: Paul Mueller (OTCMKTS:MUEL) vs. Tennant (NYSE:TNC)

Paul Mueller (OTCMKTS:MUEL) and Tennant (NYSE:TNC) are both small-cap industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paul Mueller	0	0	0	0	0.00
Tennant	0	2	2	0	2.50

Tennant has a consensus target price of $113.50, suggesting a potential upside of 52.56%. Given Tennant’s stronger consensus rating and higher probable upside, analysts plainly believe Tennant is more favorable than Paul Mueller.

Volatility & Risk

Paul Mueller has a beta of 0.1, suggesting that its share price is 90% less volatile than the S&P 500. Comparatively, Tennant has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Institutional & Insider Ownership

93.3% of Tennant shares are held by institutional investors. 4.0% of Paul Mueller shares are held by insiders. Comparatively, 2.6% of Tennant shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Paul Mueller	12.37%	36.21%	18.19%
Tennant	4.42%	16.55%	8.65%

Valuation & Earnings

This table compares Paul Mueller and Tennant”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paul Mueller	$248.59 million	1.57	$29.67 million	$40.20	10.77
Tennant	$1.29 billion	1.05	$83.70 million	$2.92	25.48

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

Dividends

Paul Mueller pays an annual dividend of $1.20 per share and has a dividend yield of 0.3%. Tennant pays an annual dividend of $1.24 per share and has a dividend yield of 1.7%. Paul Mueller pays out 3.0% of its earnings in the form of a dividend. Tennant pays out 42.5% 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. Tennant has increased its dividend for 53 consecutive years. Tennant is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Tennant beats Paul Mueller on 10 of the 17 factors compared between the two stocks.

About Paul Mueller

Paul Mueller Company, together with its subsidiaries, provides manufactured equipment and components in the United States, North America, Asia, the Far East, the Netherlands, EU countries, Europe, and internationally. The company operates through four reportable segments: Dairy Farm Equipment, Industrial Equipment, Field Fabrication, and Transportation. The Dairy Farm Equipment segment offers milk cooling and storage equipment and accessories, refrigeration units, and heat recovery equipment for use on dairy farms to independent dealers for resale, and directly to farmers; and services for farmers, as well as milk coolers for rent to farmers. The Industrial Equipment segment sells food, beverage, chemical, and industrial processing equipment; and biopharmaceutical and pure water equipment, as well as stainless steel, alloy processing, storage tanks, and heat transfer products. The Field Fabrication segment sells large, field-fabricated tanks and vessels, such as stainless steel storage tanks for sanitary and industrial process applications. The Transportation segment offers delivery of products to customers; backhauls of materials and components; and contract carriage for third parties. It serves its products in various industries, including animal health, beverage, brewing, chemical, dairy farm, dairy processing, food, heat transfer, HVAC, industrial construction, oil and gas, personal care, pharmaceutical, pure water, tank fabrication, and wine. The company was founded in 1940 and is headquartered in Springfield, Missouri.

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.