Regal Rexnord (NYSE:RRX) & Gates Industrial (NYSE:GTES) Critical Comparison

Regal Rexnord (NYSE:RRX) and Gates Industrial (NYSE:GTES) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Institutional & Insider Ownership

99.7% of Regal Rexnord shares are held by institutional investors. Comparatively, 98.5% of Gates Industrial shares are held by institutional investors. 0.6% of Regal Rexnord shares are held by insiders. Comparatively, 2.7% of Gates Industrial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Regal Rexnord and Gates Industrial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Regal Rexnord	0	3	6	0	2.67
Gates Industrial	0	4	7	0	2.64

Regal Rexnord presently has a consensus price target of $232.25, suggesting a potential upside of 15.28%. Gates Industrial has a consensus price target of $31.00, suggesting a potential upside of 19.15%. Given Gates Industrial’s higher possible upside, analysts plainly believe Gates Industrial is more favorable than Regal Rexnord.

Volatility and Risk

Regal Rexnord has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500. Comparatively, Gates Industrial has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500.

Earnings and Valuation

This table compares Regal Rexnord and Gates Industrial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Regal Rexnord	$5.93 billion	2.26	$279.50 million	$4.30	46.85
Gates Industrial	$3.44 billion	1.92	$251.40 million	$0.96	27.10

Regal Rexnord has higher revenue and earnings than Gates Industrial. Gates Industrial is trading at a lower price-to-earnings ratio than Regal Rexnord, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Regal Rexnord and Gates Industrial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Regal Rexnord	4.78%	9.49%	4.65%
Gates Industrial	7.23%	10.00%	5.15%

About Regal Rexnord

Regal Rexnord Corporation manufactures and sells industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems worldwide. The Industrial Powertrain Solutions segment provides mounted and unmounted bearings, couplings, mechanical power transmission drives and components, gearboxes, gear motors, clutches, brakes, special, and industrial powertrain components and solutions for food and beverage, bulk material handling, eCommerce/warehouse distribution, energy, mining, marine, agricultural machinery, turf and garden, and general industrial markets. The Power Efficiency Solutions segment offers AC and DC motors, electronic variable speed controls, and blowers for residential, commercial HVAC, water heaters, commercial refrigeration, commercial building ventilation, pool and spa, irrigation, agriculture, conveying, and general commercial equipment markets. The Automation and Motion Control segment provides conveyor products, conveying automation subsystems, aerospace components, rotary precision motion solutions, high-efficiency miniature motors, motion controls, automation transfer switches, and switchgear for industrial applications and automation systems for material handling, aerospace and defense, factory automation, data centers, medical device, packaging, printing, semiconductor, robotic, industrial power tool, mobile off-highway, food and beverage processing, and other applications. The Industrial Systems segment offers integral motors, alternators, and aftermarket parts and kits for agriculture, marine, mining, oil and gas, food and beverage, data centers, prime and standby power, and general industrial equipment markets. It sells its products directly to original equipment manufacturers, distributors, and end-users. The company was formerly known as Regal Beloit Corporation. The company was founded in 1955 and is based in Milwaukee, Wisconsin.

About Gates Industrial

Gates Industrial Corporation PLC designs and manufactures power transmission equipment. Its products serves harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation.