A Fresh Look at Tennant (TNC) Valuation Following New T360 Scrubber Launch

Tennant (NYSE:TNC) just rolled out its new T360 mid-sized scrubber, focusing on easier operation, stronger cleaning performance, and productivity for facility owners and operators. The launch signals Tennant’s ongoing push to enhance its product lineup.

See our latest analysis for Tennant.

Tennant’s launch of the T360 comes at a time when momentum surrounding the stock has been mixed, with the share price at $79.96 and a 1-year total shareholder return of -13.77%. Still, its three- and five-year total returns remain solidly positive, which suggests enduring potential even as recent results reflect investor caution.

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With Tennant trading well below analyst price targets and showing improving fundamentals, the question becomes clear: Is the current price a rare bargain, or is the market already expecting stronger growth ahead?

Most Popular Narrative: 26.6% Undervalued

With Tennant’s most popular narrative assigning a fair value of $109 compared to its last close of $79.96, the stock stands out as notably discounted. This sets the scene for a key perspective about what is driving this outlook.

Accelerated adoption of autonomous mobile robots (AMRs) and equipment-as-a-service programs is expanding Tennant's recurring revenue base, supported by robust customer demand amid labor shortages and higher labor costs. This combination is expected to drive both future revenue growth and margin expansion. Heightened focus on hygiene and cleanliness standards in facilities globally, especially post-pandemic, is enlarging Tennant's addressable market and supporting stronger order pipelines, which is anticipated to translate into steady sales growth over time.

Read the complete narrative.

Want to dig into the financial engine behind that discount? The most closely watched narrative signals that robust top-line growth and margin expansion could rewrite expectations and anchor a surprising target price. Uncover the detailed projections and the bold assumptions that fuel this optimistic scenario.

Result: Fair Value of $109 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, significant international market weakness or escalating input costs could derail recent gains, which raises questions about whether current optimism is justified.

Find out about the key risks to this Tennant narrative.

Another View: Market Multiples Paint a Cautious Picture

While our earlier analysis highlights Tennant as undervalued, the price-to-earnings ratio tells a different story. Tennant trades at 24.3x earnings, slightly higher than the Machinery industry average of 23.8x and well above its fair ratio of 22.3x. This could limit upside if the market turns cautious. How will Tennant bridge this valuation gap?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Tennant Narrative

If you find yourself forming a different conclusion or want to dive into the numbers personally, you can build your own story in just a few minutes. Do it your way

A great starting point for your Tennant research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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