Financial Contrast: Gorman-Rupp (NYSE:GRC) and NN (NASDAQ:NNBR)

NN (NASDAQ:NNBR) and Gorman-Rupp (NYSE:GRC) are both small-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, dividends, analyst recommendations, risk and institutional ownership.

Insider and Institutional Ownership

53.9% of NN shares are owned by institutional investors. Comparatively, 59.3% of Gorman-Rupp shares are owned by institutional investors. 5.6% of NN shares are owned by insiders. Comparatively, 11.6% of Gorman-Rupp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares NN and Gorman-Rupp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NN	$422.21 million	0.83	-$34.00 million	($0.86)	-4.33
Gorman-Rupp	$682.39 million	2.90	$53.02 million	$2.80	26.74

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NN	-5.43%	25.25%	2.60%
Gorman-Rupp	10.20%	17.13%	8.61%

Analyst Ratings

This is a breakdown of current recommendations for NN and Gorman-Rupp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NN	1	1	2	1	2.60
Gorman-Rupp	0	2	1	0	2.33

NN currently has a consensus target price of $5.67, indicating a potential upside of 52.33%. Given NN’s stronger consensus rating and higher probable upside, analysts clearly believe NN is more favorable than Gorman-Rupp.

Risk and Volatility

NN has a beta of 2.74, indicating that its share price is 174% more volatile than the S&P 500. Comparatively, Gorman-Rupp has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Summary

Gorman-Rupp beats NN on 9 of the 15 factors compared between the two stocks.

About NN

NN, Inc., together with its subsidiaries, designs, manufactures, and sells high-precision components and assemblies for various end markets in the United States and internationally. It operates through two segments, Mobile Solutions and Power Solutions. The Mobile Solutions segment manufactures and sells system critical components for automotive, general industrial, and medical end markets for use in power steering, braking, transmissions, gasoline fuel system, diesel injection, and diesel emissions treatment applications, as well as in heating, ventilation, and air conditioning. The Power Solutions segment designs, manufactures, and sells a range of high-precision metal and plastic components, assemblies, and finished devices used in various applications, such as power control and transportation electrification. Its products include electrical contacts, connectors, contact assemblies, and precision stampings for the electrical, general industrial, automotive, aerospace and defense, and medical end markets. This segment also produces various tools and instruments for the orthopaedics and medical/surgical end markets. NN, Inc. was founded in 1980 and is headquartered in Charlotte, North Carolina.

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.