ESAB (NYSE:ESAB) and Regal Rexnord (NYSE:RRX) Head-To-Head Analysis

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

Institutional and Insider Ownership

91.1% of ESAB shares are owned by institutional investors. Comparatively, 99.7% of Regal Rexnord shares are owned by institutional investors. 7.2% of ESAB shares are owned by insiders. Comparatively, 0.8% of Regal Rexnord 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.

Valuation & Earnings

This table compares ESAB and Regal Rexnord’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ESAB	$2.77 billion	2.03	$205.29 million	$3.82	24.40
Regal Rexnord	$6.25 billion	1.44	-$57.40 million	($0.48)	-282.60

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

Risk and Volatility

ESAB has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500. Comparatively, Regal Rexnord has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500.

Dividends

ESAB pays an annual dividend of $0.32 per share and has a dividend yield of 0.3%. Regal Rexnord pays an annual dividend of $1.40 per share and has a dividend yield of 1.0%. ESAB pays out 8.4% of its earnings in the form of a dividend. Regal Rexnord pays out -291.7% 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. Regal Rexnord has raised its dividend for 19 consecutive years. Regal Rexnord is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ESAB	8.39%	17.59%	7.39%
Regal Rexnord	-0.48%	9.42%	3.86%

Analyst Recommendations

This is a summary of current ratings and recommmendations for ESAB and Regal Rexnord, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ESAB	0	3	5	0	2.63
Regal Rexnord	0	1	5	0	2.83

ESAB presently has a consensus target price of $98.63, suggesting a potential upside of 5.80%. Regal Rexnord has a consensus target price of $192.00, suggesting a potential upside of 41.54%. Given Regal Rexnord’s stronger consensus rating and higher possible upside, analysts clearly believe Regal Rexnord is more favorable than ESAB.

Summary

ESAB beats Regal Rexnord on 9 of the 16 factors compared between the two stocks.

About ESAB

ESAB Corporation engages in the formulation, development, manufacture, and supply of consumable products and equipment for use in cutting, joining, automated welding, and gas control equipment. Its comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a range of specialty and other materials; and cutting consumables comprising electrodes, nozzles, shields, and tips. The company's equipment ranges from portable welding machines to large customized automated cutting and welding systems. It also offers a range of software and digital solutions to help its customers increase their productivity, remotely monitor their welding operations, and digitize their documentation. The company sells its products under the ESAB brand to various end markets, such as general industry, infrastructure, renewable energy, medical and life sciences, transportation, construction, and energy. It offers its products through independent distributors and direct salespeople. The company operates in North America, South America, Europe, the Middle East, India, Africa, and the Asia Pacific. ESAB Corporation was founded in 1904 and is headquartered in North Bethesda, Maryland.

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.