Emerson Electric (NYSE: EMR) and Regal Beloit Corporation (NYSE:RBC) are both mid-cap industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, institutional ownership, risk, dividends, analyst recommendations and profitability.

Dividends

Emerson Electric pays an annual dividend of C$1.92 per share and has a dividend yield of 3.1%. Regal Beloit Corporation pays an annual dividend of $1.04 per share and has a dividend yield of 1.3%. Emerson Electric pays out 81.7% 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 pays out 22.6% of its earnings in the form of a dividend. Emerson Electric has raised its dividend for 7 consecutive years and Regal Beloit Corporation has raised its dividend for 60 consecutive years.

Institutional and Insider Ownership

70.1% of Emerson Electric shares are owned by institutional investors. Comparatively, 92.2% of Regal Beloit Corporation shares are owned by institutional investors. 0.8% of Emerson Electric shares are owned by insiders. Comparatively, 2.2% of Regal Beloit Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Emerson Electric and Regal Beloit Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emerson Electric 9.94% 20.47% 9.05%
Regal Beloit Corporation 6.28% 9.76% 4.84%

Valuation and Earnings

This table compares Emerson Electric and Regal Beloit Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Emerson Electric $15.26 billion 2.58 $1.64 billion C$2.35 26.22
Regal Beloit Corporation $3.22 billion 1.06 $203.40 million $4.60 16.82

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.

Analyst Ratings

This is a breakdown of current recommendations for Emerson Electric and Regal Beloit Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emerson Electric 2 9 4 0 2.13
Regal Beloit Corporation 0 5 5 0 2.50

Emerson Electric presently has a consensus target price of C$65.23, indicating a potential upside of 5.88%. Regal Beloit Corporation has a consensus target price of $86.14, indicating a potential upside of 11.37%. Given Regal Beloit Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Regal Beloit Corporation is more favorable than Emerson Electric.

Volatility & Risk

Emerson Electric has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500. Comparatively, Regal Beloit Corporation has a beta of 1.5, indicating that its share price is 50% more volatile than the S&P 500.

Summary

Regal Beloit Corporation beats Emerson Electric on 9 of the 17 factors compared between the two stocks.

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.

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.

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