Tennant Co (TNC) AI Stock Analysis

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Tennant Co

(NYSE:TNC)

69Neutral

Tennant Co's stock score reflects strong financial performance with robust cash flow and profitability. Despite challenges, the company's strategic initiatives and investments in AMR and ERP modernization provide a positive long-term outlook. Technical analysis suggests caution due to current bearish trends, but valuation remains fair. Earnings call insights highlight both achievements and hurdles, balancing the overall assessment.

Tennant Co (TNC) vs. S&P 500 (SPY)

Market Cap

$1.34B

Dividend Yield1.62%

Average Volume (3M)193.07K

Price to Earnings (P/E)16.2

Beta (1Y)0.99

Revenue Growth3.47%

EPS Growth-24.70%

CountryUS

Employees4,632

SectorIndustrials

Sector Strength69

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)4.38

Shares Outstanding18,806,189

10 Day Avg. Volume199,841

30 Day Avg. Volume193,071

Financial Highlights & Ratios

PEG Ratio3.60

Price to Book (P/B)N/A

Price to Sales (P/S)1.20

Price to Cash Flow (P/CF)10.30

P/FCF Ratio10.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$125.00

Price Target Upside75.76% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering0

Tennant Co Business Overview & Revenue Model

Company DescriptionTennant Company (TNC) is a global leader in the design, manufacture, and marketing of solutions that help create a cleaner, safer, and healthier world. The company operates primarily in the industrial and commercial cleaning sector, offering a wide range of products including floor cleaning machines, outdoor cleaning equipment, and parts and consumables. Tennant serves diverse markets such as retail, hospitality, education, healthcare, and industrial facilities, providing innovative and sustainable cleaning solutions to its customers worldwide.

How the Company Makes MoneyTennant Company generates revenue through the sales of its cleaning equipment and related products. The company's primary revenue streams include the sale of floor cleaning machines and outdoor cleaning equipment. Additionally, Tennant earns income from selling parts and consumables, which are essential for the maintenance and operation of its machines. The company also offers service contracts and leasing options, providing customers with flexible solutions to maintain their cleaning equipment. Tennant's revenue is further supported by its global distribution network and strategic partnerships, which enhance its market presence and customer reach.

Tennant Co Financial Statement Overview

Summary

Tennant Co exhibits strong financial health with consistent revenue growth and profitability. The company benefits from a robust cash flow position, supporting its operational and strategic initiatives. While the balance sheet shows minimal debt, the equity ratio suggests room for improvement in asset utilization.

Income Statement

Positive

The company has shown steady revenue growth over the years, with a TTM revenue of $1.29 billion, representing a consistent upward trend. The gross profit margin stands at approximately 42.8%, while the net profit margin is around 6.5%. Despite a slight dip in EBIT margin from 2023, the company maintains a healthy profitability level with an EBITDA margin of 8.9%.

Balance Sheet

Positive

The balance sheet reflects a strong equity position with a debt-to-equity ratio of zero in the latest period, indicating no reliance on debt financing. However, the equity ratio is relatively low, with stockholders' equity constituting a small part of total assets. Return on equity is moderate at around 19.9%, indicating efficient use of equity to generate profits.

Cash Flow

Very Positive

The cash flow statement is robust, with a significant free cash flow growth, indicating strong cash generation ability. The operating cash flow to net income ratio is favorable, showing efficient conversion of profits into cash. Free cash flow to net income ratio also indicates healthy cash reserves relative to income.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.29B	1.24B	1.09B	1.09B	1.00B
	Gross Profit
550.00M	527.80M	420.90M	438.00M	407.80M
	EBIT
114.30M	138.60M	87.20M	93.70M	63.70M
	EBITDA
114.30M	188.40M	136.30M	137.00M	117.10M
	Net Income Common Stockholders
83.70M	109.50M	66.30M	64.90M	33.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
31.00M	117.10M	77.40M	123.60M	141.00M
	Total Assets
1.19B	1.11B	1.09B	1.06B	1.08B
	Total Debt
254.30M	242.40M	317.40M	293.00M	337.20M
	Net Debt
154.70M	125.30M	240.00M	169.40M	196.20M
	Total Liabilities
568.00M	535.10M	613.00M	626.60M	676.50M
	Stockholders Equity
42.10M	577.00M	470.80M	433.80M	404.80M
Cash Flow		Free Cash Flow
68.80M	164.40M	-54.40M	46.20M	103.80M
	Operating Cash Flow
89.70M	188.40M	-25.10M	69.40M	133.80M
	Investing Cash Flow
-78.40M	-23.20M	-24.50M	1.70M	-29.90M
	Financing Cash Flow
-25.20M	-122.60M	8.10M	-84.50M	-42.80M

Tennant Co Technical Analysis

Technical Analysis Sentiment

Negative

Last Price71.12

Price Trends

50DMA

82.57

Negative

100DMA

83.41

Negative

200DMA

88.95

Negative

Market Momentum

MACD

-3.48

Positive

RSI

32.38

Neutral

STOCH

24.93

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TNC, the sentiment is Negative. The current price of 71.12 is below the 20-day moving average (MA) of 78.17, below the 50-day MA of 82.57, and below the 200-day MA of 88.95, indicating a bearish trend. The MACD of -3.48 indicates Positive momentum. The RSI at 32.38 is Neutral, neither overbought nor oversold. The STOCH value of 24.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TNC.

Tennant Co Risk Analysis

Tennant Co disclosed 18 risk factors in its most recent earnings report. Tennant Co reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Tennant Co Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
THR	78 Outperform	$837.54M	18.20	9.75%	―	0.48%	-5.52%
GRC	70 Outperform	$876.52M	21.84	11.09%	2.18%	0.02%	14.58%
TNC	69 Neutral	$1.34B	16.23	13.98%	1.62%	3.47%	-24.70%
SXI	68 Neutral	$1.70B	31.17	8.57%	0.87%	-2.46%	-60.60%
HLIO	62 Neutral	$902.32M	23.14	4.54%	1.33%	-3.55%	2.73%
Sector *	62 Neutral	$7.62B	13.01	3.19%	3.32%	3.77%	-14.28%
HI	51 Neutral	$1.50B	―	-14.61%	4.20%	5.88%	-324.10%

* Industrials Sector Average

Performance Comparison

TNC

Tennant Co

71.12

-43.72

-38.07%

GRC

Gorman-Rupp Company

33.42

-2.44

-6.80%

Hillenbrand

20.90

-25.03

-54.50%

SXI

Standex International

142.78

-26.81

-15.81%

HLIO

Helios Technologies

26.69

-18.89

-41.44%

THR

Thermon Group Holdings

24.90

-5.52

-18.15%

Tennant Co Earnings Call Summary

Earnings Call Date: Feb 17, 2025 | % Change Since: -18.22% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Neutral

The earnings call highlights Tennant Company's successful execution of strategic initiatives, resulting in record net sales and strong order growth. However, challenges persist in APAC with significant declines in China, legal expenses, and ERP modernization costs. The company anticipates a slight organic sales decline in 2025 due to backlog headwinds and currency impacts. Overall, the sentiment reflects a positive trajectory with some notable hurdles.

Highlights

Record Net Sales and EBITDA

For the full year, net sales reached $1.287 billion, adjusted EBITDA rose to $208.8 million, and the adjusted EBITDA margin expanded to 16.2%.

Strong Order Growth

Orders increased 6.4% over 2023, well above long-term targets, with volume growth over 5% in Q4 and consistent order growth across the last three quarters.

Successful AMR Product Expansion

AMR equipment sales reached $75 million in 2024, and the new X6 ROVR model will be launched, with AMR revenue targeted to exceed $100 million by 2027.

Strategic M&A and Investments

Activated M&A framework with investments in Brain Corp and acquisition of TCS, contributing to a long-term target of $150 million in net sales growth from M&A over three years.

Lowlights

Decline in APAC Performance

Business performance in APAC impacted by stark demand declines in China and government-induced overproduction, leading to a 19% organic sales decrease in the region.

Legal Contingency Expense

A legal dispute resulted in a jury ruling against Tennant, awarding $9.8 million in damages plus $4.7 million in prejudgment interest.

ERP Modernization Costs

In 2024, invested $37 million in the ERP project, with $14 million expensed and $23 million capitalized, impacting financial results.

Anticipated 2025 Organic Sales Decline

Guidance for 2025 indicates a negative 1% to negative 4% organic sales decline, impacted by $125 million backlog headwind and significant foreign currency headwinds.

Company Guidance

During Tennant Company's fourth quarter and full year fiscal 2024 earnings conference call, the company provided guidance for 2025, highlighting several key metrics and strategic initiatives. Tennant anticipates net sales ranging between $1,210 million and $1,250 million, reflecting an organic sales decline of 1% to 4% due to a $125 million backlog headwind from 2024. Despite this, the company aims for order growth of 3.5% to 7%. Adjusted EBITDA is expected to be between $196 million and $209 million, with an adjusted EBITDA margin ranging from 16.2% to 16.7%. Tennant plans to manage inflation through cost-saving initiatives and pricing discipline, projecting a gross margin expansion of 30 basis points. The company also highlighted its commitment to strategic investments, including a $50 million ERP modernization project, and projected $10 million annual savings from restructuring efforts. Furthermore, Tennant plans to achieve an adjusted EPS of $5.70 to $6.20 per diluted share, with capital expenditures of approximately $20 million. The company is focused on expanding its AMR product line, targeting AMR revenue to exceed $100 million by 2027 and leveraging its strategic partnership with Brain Corp.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.