Kadant (NYSE:KAI – Get Free Report) and Gates Industrial (NYSE:GTES – Get Free Report) are both mid-cap industrials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.
Insider & Institutional Ownership
96.1% of Kadant shares are held by institutional investors. Comparatively, 98.5% of Gates Industrial shares are held by institutional investors. 1.3% of Kadant shares are held by company insiders. Comparatively, 2.7% of Gates Industrial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Analyst Recommendations
This is a breakdown of recent ratings and price targets for Kadant and Gates Industrial, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Kadant | 0 | 2 | 1 | 1 | 2.75 |
| Gates Industrial | 0 | 5 | 6 | 0 | 2.55 |
Profitability
This table compares Kadant and Gates Industrial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Kadant | 9.69% | 11.57% | 7.09% |
| Gates Industrial | 7.30% | 10.36% | 5.27% |
Volatility and Risk
Kadant has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, Gates Industrial has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500.
Earnings & Valuation
This table compares Kadant and Gates Industrial”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Kadant | $1.05 billion | 3.20 | $101.97 million | $8.65 | 32.94 |
| Gates Industrial | $3.44 billion | 1.78 | $251.40 million | $0.97 | 24.84 |
Gates Industrial has higher revenue and earnings than Kadant. Gates Industrial is trading at a lower price-to-earnings ratio than Kadant, indicating that it is currently the more affordable of the two stocks.
Summary
Kadant beats Gates Industrial on 8 of the 15 factors compared between the two stocks.
About Kadant
Kadant Inc. supplies technologies and engineered systems worldwide. It operates in three segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment develops, manufactures, and markets fluid-handling systems and equipment, such as rotary joints, syphons, turbulator bars, expansion joints, and engineered steam and condensate systems; and doctoring, cleaning, and filtration systems and related consumables consisting of doctor systems and holders, doctor blades, cleaning shower and fabric-conditioning systems, forming systems and wear surfaces, and water-filtration systems. The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, engineered knife systems, industrial automation and control, recycling and approach flow systems, and virgin pulping process equipment for use in the packaging, tissue, wood products, and alternative fuel industries. The Material Handling segment offers conveying and vibratory equipment, and baling products; and manufactures and sells biodegradable absorbent granules for carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. The company markets and sells its products, services, and systems through direct sales, independent sales agents, and distributors. The company was formerly known as Thermo Fibertek, Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was incorporated in 1991 and is headquartered in Westford, Massachusetts.
About Gates Industrial
Gates Industrial Corporation PLC designs and manufactures power transmission equipment. Its products serves harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation.
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