Caterpillar (NYSE:CAT) & Gorman-Rupp (NYSE:GRC) Head to Head Analysis

Gorman-Rupp (NYSE:GRC) and Caterpillar (NYSE:CAT) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, earnings and analyst recommendations.

Profitability

This table compares Gorman-Rupp and Caterpillar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gorman-Rupp	10.20%	17.13%	8.61%
Caterpillar	15.21%	59.87%	11.99%

Volatility & Risk

Gorman-Rupp has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, Caterpillar has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500.

Dividends

Gorman-Rupp pays an annual dividend of $0.76 per share and has a dividend yield of 1.1%. Caterpillar pays an annual dividend of $6.52 per share and has a dividend yield of 1.0%. Gorman-Rupp pays out 27.1% of its earnings in the form of a dividend. Caterpillar pays out 25.6% 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. Gorman-Rupp has increased its dividend for 52 consecutive years and Caterpillar has increased its dividend for 30 consecutive years. Gorman-Rupp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Gorman-Rupp and Caterpillar”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gorman-Rupp	$682.39 million	2.79	$53.02 million	$2.80	25.70
Caterpillar	$67.59 billion	4.24	$8.88 billion	$25.49	24.43

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

Insider & Institutional Ownership

59.3% of Gorman-Rupp shares are held by institutional investors. Comparatively, 71.0% of Caterpillar shares are held by institutional investors. 11.6% of Gorman-Rupp shares are held by insiders. Comparatively, 0.3% of Caterpillar shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Gorman-Rupp and Caterpillar, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gorman-Rupp	0	2	1	0	2.33
Caterpillar	0	12	15	0	2.56

Caterpillar has a consensus price target of $913.96, indicating a potential upside of 46.77%. Given Caterpillar’s stronger consensus rating and higher probable upside, analysts plainly believe Caterpillar is more favorable than Gorman-Rupp.

Summary

Caterpillar beats Gorman-Rupp on 13 of the 17 factors compared between the two stocks.

About Gorman-Rupp

The Gorman-Rupp Company designs, manufactures, and sells pumps and pump systems in the United States and internationally. The company’s products include self-priming centrifugal, standard centrifugal, magnetic drive centrifugal, axial and mixed flow, vertical turbine line shaft, submersible, high-pressure booster, rotary gear, diaphragm, bellows, and oscillating pumps. Its products are used in water, wastewater, construction, dewatering, industrial, petroleum, original equipment, agriculture, fire suppression, heating, ventilating and air conditioning, military, and other liquid-handling applications. The company markets its products through a network of distributors, manufacturers’ representatives, third-party distributor catalogs, direct sales, and e-commerce. The Gorman-Rupp Company was founded in 1933 and is headquartered in Mansfield, Ohio.

About Caterpillar

Caterpillar Inc. manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives in worldwide. Its Construction Industries segment offers asphalt pavers, compactors, road reclaimers, forestry machines, cold planers, material handlers, track-type tractors, excavators, telehandlers, motor graders, and pipelayers; compact track, wheel, track-type, backhoe, and skid steer loaders; and related parts and tools. The company's Resource Industries segment provides electric rope and hydraulic shovels, draglines, rotary drills, hard rock vehicles, tractors, mining trucks, wheel loaders, off-highway and articulated trucks, wheel tractor scrapers and dozers, fleet management products, landfill and soil compactors, machinery components, autonomous ready vehicles and solutions, work tools, and safety services and mining performance solutions, as well as related parts and services. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines, drivetrain, and integrated systems and solutions; turbines, centrifugal gas compressors, and related services; and diesel-electric locomotives and components, and other rail-related products. The company's Financial Products segment provides operating and finance leases, installment sale contracts, revolving charge accounts, repair/rebuild financing services, working capital loans, and wholesale financing; and insurance and risk management products and services. Its All Other Operating segment offers filters and fluids, undercarriage, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; logistics solutions and distribution services; brand management and marketing strategy services; and digital investments services. Caterpillar Inc. was founded in 1925 and is headquartered in Irving, Texas.