Regal Beloit Corporation (NYSE: RBC) and Emerson Electric (NYSE:EMR) are both mid-cap industrial products companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, dividends and analyst recommendations.
Risk and Volatility
Regal Beloit Corporation has a beta of 1.5, suggesting that its share price is 50% more volatile than the S&P 500. Comparatively, Emerson Electric has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500.
This table compares Regal Beloit Corporation and Emerson Electric’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Regal Beloit Corporation||6.29%||9.88%||4.79%|
This is a breakdown of recent ratings and target prices for Regal Beloit Corporation and Emerson Electric, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Regal Beloit Corporation||0||5||4||0||2.44|
Regal Beloit Corporation currently has a consensus target price of $86.33, indicating a potential upside of 6.98%. Emerson Electric has a consensus target price of $64.45, indicating a potential upside of 0.55%. Given Regal Beloit Corporation’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Regal Beloit Corporation is more favorable than Emerson Electric.
Valuation & Earnings
This table compares Regal Beloit Corporation and Emerson Electric’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Regal Beloit Corporation||$3.22 billion||1.12||$203.40 million||$4.53||17.81|
|Emerson Electric||$20.20 billion||2.03||$1.64 billion||$2.25||28.49|
Emerson Electric has higher revenue and earnings than Regal Beloit Corporation. Regal Beloit Corporation is trading at a lower price-to-earnings ratio than Emerson Electric, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
92.4% of Regal Beloit Corporation shares are held by institutional investors. Comparatively, 70.0% of Emerson Electric shares are held by institutional investors. 2.2% of Regal Beloit Corporation shares are held by insiders. Comparatively, 0.8% of Emerson Electric shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Regal Beloit Corporation pays an annual dividend of $1.04 per share and has a dividend yield of 1.3%. Emerson Electric pays an annual dividend of $1.92 per share and has a dividend yield of 3.0%. Regal Beloit Corporation pays out 23.0% of its earnings in the form of a dividend. Emerson Electric pays out 85.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Regal Beloit Corporation has increased its dividend for 7 consecutive years and Emerson Electric has increased its dividend for 60 consecutive years. Emerson Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Emerson Electric beats Regal Beloit Corporation on 9 of the 16 factors compared between the two stocks.
Regal Beloit Corporation Company Profile
Regal Beloit Corporation is a manufacturer of electric motors, electrical motion controls, power generation and power transmission products. The Company operates through three segments: the Commercial and Industrial Systems segment, with its principal line of business in medium and large electric motors, power generation products, high-performance drives and controls and capacitors; the Climate Solutions segment, with its principal line of business in small motors, controls and air moving products, and the Power Transmission Solutions segment, with its principal line of business in power transmission gearing, hydraulic pump drives, open gearing and specialty mechanical products which control motion and torque. It sells its products directly to original equipment manufacturers (OEMs), distributors and end users. It operates distribution facilities in Plainfield, Indiana; McAllen, Texas; LaVergne, Tennessee, and Florence, Kentucky.
Emerson Electric Company Profile
Emerson Electric Co. is a diversified global manufacturing company, which provides solutions to customers by bringing technology and engineering together in the industrial, commercial and consumer markets around the world. The Company operates through four segments based on the nature of the products and services rendered: Process Management, Industrial Automation, Climate Technologies and Commercial & Residential Solutions. The Company’s principal production operations are electronics assembly, metal stamping, forming, casting, machining, welding, plating, heat treating, painting and assembly. In addition, the Company uses specialized production operations, including automatic and semiautomatic testing, automated material handling and storage, ferrous and nonferrous machining, and special furnaces for heat treating and foundry applications. The Company provides measurement, control and diagnostic technologies for automated industrial processes.
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