Analyzing Gorman-Rupp (NYSE:GRC) & Lindsay (NYSE:LNN)

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

Analyst Recommendations

This is a summary of current ratings for Lindsay and Gorman-Rupp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lindsay	1	2	0	0	1.67
Gorman-Rupp	0	2	1	0	2.33

Lindsay presently has a consensus target price of $119.00, suggesting a potential upside of 10.67%. Given Lindsay’s higher probable upside, research analysts plainly believe Lindsay is more favorable than Gorman-Rupp.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Lindsay	8.75%	10.96%	6.74%
Gorman-Rupp	10.20%	17.13%	8.61%

Insider and Institutional Ownership

89.9% of Lindsay shares are owned by institutional investors. Comparatively, 59.3% of Gorman-Rupp shares are owned by institutional investors. 1.8% of Lindsay shares are owned by insiders. Comparatively, 11.6% of Gorman-Rupp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Lindsay pays an annual dividend of $1.52 per share and has a dividend yield of 1.4%. Gorman-Rupp pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. Lindsay pays out 28.6% of its earnings in the form of a dividend. Gorman-Rupp pays out 28.6% 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. Lindsay has raised its dividend for 22 consecutive years and Gorman-Rupp has raised its dividend for 52 consecutive years. Lindsay is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lindsay	$635.86 million	1.72	$55.65 million	$5.32	20.21
Gorman-Rupp	$722.48 million	2.56	$53.02 million	$2.80	25.01

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

Risk and Volatility

Lindsay has a beta of 0.73, indicating that its share price is 27% less 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 Lindsay on 11 of the 17 factors compared between the two stocks.

About Lindsay

Lindsay Corporation is a manufacturer of irrigation and infrastructure equipment. Founded in 1955 and headquartered in Omaha, Nebraska, the company is best known for its Zimmatic center-pivot and lateral-move irrigation systems, which help farmers apply water to crops. Its agricultural technology offerings also include FieldNET, a platform for remotely monitoring and controlling irrigation equipment. Lindsay’s infrastructure business supplies products and systems for transportation safety and traffic management.

About Gorman-Rupp

Gorman-Rupp is a manufacturer of pumps and related pumping systems. Its products include self-priming and standard centrifugal pumps, submersible pumps, rotary gear pumps, diaphragm pumps and engine-driven units, serving applications that require the movement of water and other fluids. The company’s products are used in markets including municipal water and wastewater, construction, industrial processing, agriculture, petroleum and fire protection. Gorman-Rupp serves customers in the United States and internationally.