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

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 dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NN	$483.01 million	0.52	-$34.00 million	($0.86)	-3.10
Gorman-Rupp	$722.48 million	2.48	$53.02 million	$2.80	24.27

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.

Analyst Recommendations

This is a summary of recent ratings and price targets 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 price target of $5.67, indicating a potential upside of 112.23%. Given NN’s stronger consensus rating and higher possible upside, equities research analysts clearly believe NN is more favorable than Gorman-Rupp.

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%

Volatility and Risk

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.

Dividends

NN pays an annual dividend of $0.28 per share and has a dividend yield of 10.5%. Gorman-Rupp pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. NN pays out -32.6% 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. Gorman-Rupp has raised its dividend for 52 consecutive years. NN is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Gorman-Rupp beats NN on 10 of the 18 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.