Tennant Company (TNC) is a world leader in designing, manufacturing, and marketing solutions to reinvent how the world cleans. TNC’s extensive product range includes floor maintenance, cleaning equipment, sustainable cleaning technologies, aftermarket parts, and consumables. These products are marketed under brands like Tennant, Nobles, Alfa Uma Empresa Tennant, IPC, Gaomei, and Rongen.
The century-old industrial company has continuously innovated itself to deliver the best products and solutions to its customers. The company’s operations are not limited to cleaning products but also extend to various business solutions, like financing, rental, and leasing programs.
Recently, the company reported its financial results for the fourth quarter and full-year 2024. The company posted revenue of $328.90 million, exceeding analysts’ estimate of $323.27 million. Also, its non-GAAP EPS came in at $1.52 for the quarter, higher than the consensus estimate of $1.37.
In 2024, Tennant introduced a variety of innovative products, targeting the specific requirements of its customers. These products included advanced scrubbers, like T12 and T291. Further, the company’s 2025 product line is also promising. TNC is preparing for the launch of X6 ROVR and XC1, which will be commercially available in the second quarter of 2025.
X6 ROVR is a larger purpose-built AMR scrubber targeting retail, education, healthcare, manufacturing, logistics, warehousing, and large public spaces. It also features a fully integrated autonomous charging station.
Besides, Tennant has been actively demonstrating its commitment to returning capital to shareholders. The company recently authorized a new share repurchase program of up to 2,000,000 shares of its common stock, effective February 11, 2025.
Also, the directors of the company declared a regular quarterly cash dividend of $0.295 per share on February 11, 2025. The dividend is payable on March 14, 2025, to shareholders of record at the close of business on February 28, 2025.
Shares of TNC have gained 4.3% year-to-date to close its last trading session at $84.74.
Let’s look at factors that could influence TNC’s performance in the upcoming months.
Positive Recent Developments
On December 10, 2024, TNC introduced lithium-ion battery-powered versions of its popular T12 and T16 scrubbers. The product innovation marked a significant milestone in the company’s product innovation. It helps customers achieve their productivity and sustainability goals.
Also, on September 24, 2024, the company launched its T291 small walk-behind scrubber in the North American market. The T291 is a walk-behind scrubber built to simplify and improve facility management by combining cleaning power and maneuverability. The product is designed to be used in both hard-to-reach spaces and open areas.
The product’s versatility and small size make it an efficient fit for mid-size retail, healthcare, and education environments.
Solid Financials
For the fourth quarter that ended December 31, 2024, TNC’s net sales increased 5.6% year-over-year to $328.90 million. Its adjusted gross profit grew 3.4% from the year-ago value to $136 million. Also, the company’s adjusted operating income rose 22.3% from the prior quarter’s quarter to $34 million.
Furthermore, the company’s net income and EPS were $6.60 million and $0.35 for the quarter, respectively. TNC’s adjusted EBITDA was $47.40 million for the quarter, up 14.2% year-over-year.
The company’s total assets stood at $1.19 billion as of December 31, 2024, compared to $1.11 billion as of December 31, 2023.
Impressive Historical Growth
TNC’s revenue grew at a CAGR of 5.7% over the past three years, while its EBITDA improved at a CAGR of 9%. Its EBIT increased at a CAGR of 13.5% over the same period, while the company’s net income and EPS grew at respective CAGRs of 8.9% and 8.4% over the same time frame.
In addition, the company’s tangible book value and levered free cash flow increased at CAGRs of 38.2% and 10.7% over the same timeframe, respectively.
Favorable Analyst Estimates
Analysts expect TNC’s EPS for the third quarter (ending September 2025) to come in at $1.49, indicating an increase of 7.2% year-over-year. The consensus revenue estimate for the same period is $306.03 million. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is remarkable.
For the fiscal year (ending December 2026), the company’s revenue and EPS are anticipated to grow 4.5% and 13.9% year-over-year to $1.30 billion and $6.76, respectively.
Elevated Valuation
In terms of forward non-GAAP P/E, TNC is currently trading at 14.34x, 25.3% lower than the industry average of 18.68x. Also, the stock’s forward EV/Sales and EV/EBITDA of 1.41x and 8.67x are considerably lower than the industry averages of 1.89x and 11.08x, respectively.
Additionally, the stock’s forward Price/Sales of 1.29x is 12.3% lower than the industry average of 1.47x.
POWR Ratings Reflect Promise
TNC’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. TNC has a B grade for Value, consistent with its low valuation.
TNC is ranked #18 among the 77 stocks in the A-rated Industrial - Machinery industry.
Beyond what I have stated above, we have also given TNC grades for Stability, Quality, Sentiment, Growth, and Momentum. Get access to all the TNC ratings here.
Bottom Line
TNC recently reported solid financial results for the fourth quarter and full-year 2024. The company is continuously growing with innovative product launches and the integration of advanced features to keep demand for its offerings high. TNC’s long-term prospects further appear promising, driven by strategic fund allocation and solid cash flow position.
Given TNC’s strong financial performance, strong market position, and discounted valuation, investing in this stock seems prudent.
How Does Tennant Company (TNC) Stack Up Against Its Peers?
While TNC has an overall POWR Rating of B, investors could also check out these other stocks within the A-rated Industrial - Machinery industry with A (Strong Buy) or B (Buy) ratings: TechnoPro Holdings Inc. ADR (TCCPY), Luxfer Holdings PLC Ordinary Shares (LXFR), and Astec Industries, Inc. (ASTE).
For exploring more A and B-rated industrial stocks, click here.
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TNC shares were trading at $85.39 per share on Friday afternoon, up $0.65 (+0.77%). Year-to-date, TNC has gained 4.73%, versus a 0.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
Is Tennant Company Cleaning Up in the Industrial Sector? StockNews.com
