Critical Survey: DNOW (NYSE:DNOW) & Tennant (NYSE:TNC)

DNOW (NYSE:DNOW) and Tennant (NYSE:TNC) are both small-cap industrials companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Institutional and Insider Ownership

97.6% of DNOW shares are held by institutional investors. Comparatively, 93.3% of Tennant shares are held by institutional investors. 2.7% of DNOW shares are held by company insiders. Comparatively, 2.6% of Tennant shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility & Risk

DNOW has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500. Comparatively, Tennant has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.

Earnings & Valuation

This table compares DNOW and Tennant”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DNOW	$2.37 billion	0.64	$81.00 million	$0.76	18.57
Tennant	$1.29 billion	1.14	$83.70 million	$3.21	24.82

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

Profitability

This table compares DNOW and Tennant’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DNOW	3.45%	8.97%	6.26%
Tennant	4.84%	16.41%	8.67%

Analyst Ratings

This is a breakdown of current recommendations for DNOW and Tennant, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DNOW	0	3	1	0	2.25
Tennant	0	2	1	0	2.33

DNOW presently has a consensus target price of $18.00, indicating a potential upside of 27.57%. Tennant has a consensus target price of $125.00, indicating a potential upside of 56.89%. Given Tennant’s stronger consensus rating and higher probable upside, analysts plainly believe Tennant is more favorable than DNOW.

Summary

Tennant beats DNOW on 10 of the 13 factors compared between the two stocks.

About DNOW

DNOW Inc. distributes downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation utilities, and customer on-site locations in the United States, Canada, and internationally. The company provides consumable maintenance, repair, and operating supplies; pipes, manual and automated valves, fittings, flanges, gaskets, fasteners, electrical instrumentations, artificial lift, pumping solutions, valve actuation and modular process, and measurement and control equipment; and mill supplies, tools, safety supplies, and personal protective equipment, as well as artificial lift systems, coatings, and miscellaneous expendable items. It also offers original equipment manufacturer equipment, including pumps, generator sets, air compressors, dryers, blowers, mixers, and valves; modular oil and gas tank battery solutions; and application systems, work processes, parts integration, optimization solutions, and after-sales support services. In addition, the company provides supply chain and materials management; inventory planning and management, procurement, and warehouse management, as well as solutions for logistics, point of issue technology, project management, business process, and performance metrics reporting services. It serves customers in the upstream, midstream, and downstream sectors of the energy industry, including drilling contractors, well-servicing companies, independent and national oil and gas companies, midstream operators, and refineries, as well as petrochemical, chemical, utilities, RNG facilities, and other downstream energy processors; and industrial and manufacturing companies. The company was formerly known as NOW Inc. and changed its name to DNOW Inc. in January 2024. DNOW Inc. was founded in 1862 and is headquartered in Houston, Texas.

About Tennant

Tennant Company, together with its subsidiaries, designs, manufactures, and markets floor cleaning equipment in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers a suite of products, including floor maintenance and cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair services, and asset management solutions. It provides business solutions, such as financing, rental, and leasing programs, as well as machine-to-machine asset management solutions. The company offers its products under the Tennant, Nobles, Alfa Uma Empresa Tennant, IPC, Gaomei, and Rongen brands, as well as private-label brands. Its products are used in retail establishments and distribution centers; factories and warehouses; and public venues, such as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, and other environments. The company markets its products to contract cleaners and businesses through direct sales and service organizations, as well as through a network of authorized distributors. Tennant Company was founded in 1870 and is headquartered in Eden Prairie, Minnesota.