Illinois Tool Works (NYSE: ITW) and Rexnord (NYSE:RXN) are both industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.
Risk and Volatility
Illinois Tool Works has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Rexnord has a beta of 1.6, suggesting that its share price is 60% more volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Illinois Tool Works and Rexnord, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Illinois Tool Works||0||9||7||1||2.53|
Illinois Tool Works currently has a consensus price target of $175.31, suggesting a potential upside of 10.98%. Rexnord has a consensus price target of $30.50, suggesting a potential upside of 1.09%. Given Illinois Tool Works’ higher possible upside, research analysts plainly believe Illinois Tool Works is more favorable than Rexnord.
Illinois Tool Works pays an annual dividend of $3.12 per share and has a dividend yield of 2.0%. Rexnord does not pay a dividend. Illinois Tool Works pays out 47.3% of its earnings in the form of a dividend. Illinois Tool Works has increased its dividend for 54 consecutive years.
Valuation & Earnings
This table compares Illinois Tool Works and Rexnord’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Illinois Tool Works||$14.31 billion||3.77||$1.69 billion||$6.59||23.97|
|Rexnord||$1.92 billion||1.64||$74.10 million||$1.32||22.86|
Illinois Tool Works has higher revenue and earnings than Rexnord. Rexnord is trading at a lower price-to-earnings ratio than Illinois Tool Works, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
77.6% of Illinois Tool Works shares are owned by institutional investors. Comparatively, 99.9% of Rexnord shares are owned by institutional investors. 0.8% of Illinois Tool Works shares are owned by company insiders. Comparatively, 3.5% of Rexnord shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
This table compares Illinois Tool Works and Rexnord’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Illinois Tool Works||11.79%||48.42%||14.17%|
Illinois Tool Works beats Rexnord on 12 of the 17 factors compared between the two stocks.
Illinois Tool Works Company Profile
Illinois Tool Works Inc. is a manufacturer of industrial products and equipment. The Company operates through seven segments. The Automotive OEM segment produces components and fasteners for automotive-related applications. The Food Equipment segment offers commercial food equipment. The Test & Measurement and Electronics segment produces test and measurement, and electronic manufacturing and maintenance, repair and operations (MRO) solutions. The Welding segment produces welding equipment, consumables and accessories for industrial and commercial applications. The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance. The Construction Products segment supplies engineered fastening systems and solutions. The Specialty Products segment produces beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners.
Rexnord Company Profile
Rexnord Corporation designs, manufactures, and markets process and motion control, and water management products worldwide. The company operates in two segments, Process & Motion Control Platform and Water Management Platform. It offers table top conveying chain and related accessories, metal conveying and engineered woven metals, gearing and gear drives, conveying equipment, industrial chains, and custom assemblies; custom-engineered, application-specific miniature gearboxes, and motion control assemblies and components used in aerospace, defense, medical equipment, robotics, semiconductor, instrumentation, and satellite communications; and shaft management products, such as couplings, torque limiters, electromagnetic clutches and brakes, industrial bearings, and shaft locking assemblies. The company also provides valve products, engineered water distribution solutions, drainage products, and site works products; water conservation products; and water and wastewater infrastructure products. It sells products through independent sales representatives, plumbing wholesalers, sales agencies, and direct sales and marketing associates to commercial construction, institutional, infrastructure, and residential construction end markets. The company offers its products under the Rexnord, Rex, FlatTop, Falk, Link-Belt Cambridge, Addax, Euroflex, Omega, PSI, Shafer, Stearns, Highfield, Thomas, Tollok, Zurn, Wilkins, GA, Green Turtle, VAG, Aquaflush, AquaSense, AquaVantage, AquaSpec, EcoVantage, and Zurn One brands. Rexnord Corporation was incorporated in 2006 and is based in Milwaukee, Wisconsin.
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