TENNANT CO (TNC): what the price assumes

In the published model solve dated 2026-Q2, anchored at $69.58, TENNANT CO (TNC) is priced for +1.0% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/TNC

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.3% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that call it expensive: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.

Per-Model Detail (n=12)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 6.6%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Tennant's FY2025 10-K states the company "believes it is a leading global manufacturer of floor maintenance and cleaning equipment", and its robotics line is the growth story: autonomous scrubber sales grew 85% year over year to $27 million in Q1 2026, against a target of $250 million by 2028.
• The risk is that the price already assumes the recovery: at 49x trailing earnings depressed by a disruptive ERP rollout that cut first-quarter net sales by $23 million, no family of valuation method reaches today's level.
• Watch the second-quarter report, where management projects adjusted EPS of $1.34, for evidence the ERP disruption is actually behind the P&L and the 10% order growth is converting to shipped revenue.

Bull Case

The trajectory matters more than the trailing year here, because the trailing year was self-inflicted. Tennant's recent quarters were disfigured by an ERP system cutover that reduced first-quarter 2026 net sales by $23 million and gross margin by $17 million, which is why trailing net margin sits at a thin 2.6%. Underneath the accounting noise, the demand line points the other way: orders totaled $327 million in the first quarter, up 10% year over year, and management reaffirmed full-year 2026 adjusted EPS guidance of $4.70 to $5.30 on the strength of that order momentum and ERP recovery progress. The company's own 10-K notes the demand inflection arrived late in FY2025 too: "In China, after a period marked by uneven economic recovery and pricing pressure, organic growth returned late in the year" (accession 0000097134-26-000008), with EMEA and APAC following.

The structural asset is distribution. The filing describes "the industry's largest direct sales and service organization" selling "directly in 21 countries and through distributors in more than 100 countries", a field-service network that keeps machines, aftermarket parts, and consumables flowing through one channel. That channel is now carrying a genuinely new product cycle: the autonomous ROVR line grew 85% year over year to $27 million of first-quarter sales, management has committed to ten new autonomous products with Brain Corp exclusivity extended to 2029, and the portfolio has expanded in twelve months from the X4 and X6 ROVR to the X2 ROVR SCRUB for small, high-traffic spaces. A robotics business at $250 million by 2028, management's stated target, would be roughly a fifth of today's total revenue at software-assisted economics.

The balance sheet lets management act like the disruption is temporary, which is itself information. Over the trailing year the company bought back $128.3M of stock, several times its ERP-depressed net income, while growing the dividend to an annualized $1.24 per share; the share count is falling and the Altman read sits in the safe zone. Buying back stock aggressively through a transition year is what a board does when it believes the earnings power is the guided $4.70 to $5.30, not the trailing $1.68.

Bear Case

The price is a stack of assumptions, and it is worth naming them in order of fragility. Today's level embeds roughly 9.5% annual operating-profit growth for five years and pays about 23 times company-wide operating income for the privilege. Assumption one: the ERP recovery completes on schedule and the $23 million of first-quarter sales it displaced comes back rather than leaks to competitors. Assumption two: the order book converts, because first-quarter EPS of $0.58 missed the $0.94 forecast badly even with orders up 10%. Assumption three, the load-bearing one: the robotics line scales from a $27 million quarter to a $250 million annual business by 2028. That last bet rides on a partner, since the ROVR portfolio runs on Brain Corp's operating system under an exclusivity arrangement that itself now runs only to 2029. A hardware company whose growth narrative depends on a licensed software brain has a renegotiation in its future.

The company documents the operational fragility itself. The 10-K's systems risk factor concedes that "limitations in resources and expertise may hinder our ability to upgrade these systems efficiently, potentially resulting in significant expenses, operational inefficiencies" (accession 0000097134-26-000008), which is no longer hypothetical; it is a description of the current income statement. Gross margin declined in the first quarter on volume softness, ERP issues, and pricing pressure simultaneously, and pricing pressure is the one of the three that does not fix itself when the software stabilizes.

Meanwhile the trailing financials the price stands on are thin. Trailing free cash flow of $16.3M against a $1.52B market capitalization is a 1.1% free cash flow yield, the dividend consumed 71.4% of trailing net income, and the $128.3M of buybacks ran at more than four times net income, funded from the balance sheet rather than the year's earnings. Two measures of trailing operating income are in play, roughly $91 million on the fuller-year record basis and about $54 million on the most recent quarterly run-rate, and the gap between them is the ERP hole; the bear case is simply that some of that hole is permanent. If the recovery-and-robotics narrative slips by even a year, a 49x trailing multiple has a long way down to the 18x its sector pays.

Valuation

At $85.61 (July 11, 2026), the market is paying about 23 times company-wide operating income, which under the framework's assumptions embeds roughly 9.5% annual operating-profit growth for five years. The rate is within what Tennant has recently delivered in better years; the demand is that it persist. Notably, the price asks nothing of margins: the long-run operating margin it requires, about 4.1%, is roughly what the ERP-depressed business earns today at 4.4%. The whole bet is volume recovery and growth duration.

Every family of valuation method sits below the price. Peer multiples and the forward-growth methods come closest, reading the price at roughly 1.7x and 1.8x their central estimates, while the asset-value and earnings-power frames sit much further away at 5.6x and 4.7x, capitalizing as they do a trailing year in which net margin fell to 2.6% and free cash flow to $16.3M. The trailing P/E of 49.3x against an 18x sector median carries the same message with a different label. The spread between the families is unusually wide because the denominator is unusually depressed: a business that just absorbed a $23 million sales hit and a $17 million gross-margin hit from its own systems cutover produces trailing numbers that the static methods take at face value. Two trailing operating-income bases are in play, roughly $91 million on the inversion record basis versus about $54 million on the EDGAR quarterly TTM basis; the price only makes sense against the former plus recovery, never against the latter.

The balance sheet is the stabilizer while that argument resolves. Leverage is moderate and well covered, the current ratio is 2.12, the Altman read is safe-zone, and capital return totaled $150.1M over the trailing year between $128.3M of buybacks and $21.8M of dividends on a $1.52B company. The decisive number to track is gross margin in the next two prints: the filing's own framing of the company as "a leading global manufacturer of floor maintenance and cleaning equipment" selling through "the industry's largest direct sales and service organization" (FY2025 10-K, accession 0000097134-26-000008) is only worth today's premium if that franchise's normal profitability, not the trailing year's, is the true baseline.

Catalysts

The next quarterly report is the main event, and the bar is explicit: management projects second-quarter adjusted EPS of $1.34 after first-quarter adjusted EPS of $0.58 missed forecasts on ERP disruption, and it reaffirmed full-year 2026 adjusted EPS guidance of $4.70 to $5.30. The print will show whether the $23 million of net sales the ERP cutover displaced in the first quarter is returning as shipped revenue, and whether the 10% order growth to $327 million holds as the comparison base normalizes.

The robotics cadence is the second live storyline. Tennant introduced the X2 ROVR SCRUB on May 11, 2026, extending the autonomous line into small, high-traffic spaces alongside the X4 and the X6 ROVR launched in 2025, part of a stated commitment to ten new autonomous products in two years on the way to $250 million of AMR revenue by 2028. Deployment proof points are starting to arrive at scale internationally, including a national retail rollout of X6 units in Australia beginning late August. Quarterly AMR revenue against the $27 million first-quarter mark, and any disclosure about the Brain Corp relationship now extended to 2029, are the growth-story trackers.

Demand geography rounds out the watch list: the FY2025 10-K noted organic growth returning late in the year in China and improving in EMEA and APAC (accession 0000097134-26-000008), so regional organic growth rates in coming quarters will indicate whether that inflection was durable or a restock. With buybacks running at $128.3M over the trailing year, continued repurchase pace is also a signal of management's internal confidence in the guided recovery.

Peer Cohorts (Per Segment, With Filing Citations)

Tennant (consolidated) (reported)

• MIDD (THE MIDDLEBY CORPORATION)
• FY2025 10-K: …while delivering operational efficiencies. The company has identified these issues as key concerns for most of its customers. The company often identifies product improvement opportunities by working closely with customers on specific applications. Most research and development activities are performed by the…
• FY2025 10-K: …0000769520 2025 FY false http://fasb.org/us-gaap/2025#SellingGeneralAndAdministrativeExpense http://fasb.org/us-gaap/2025#AccruedLiabilitiesCurrent iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure midd:segment midd:plan 0000769520 2024-12-29 2026-01-03 0000769520 2025-06-28 0000769520 2026-03-02…
• NDSN (NORDSON CORPORATION)
• FY2025 10-K: …Balance Sheets as of October 31, 2025 and October 31, 2024 Consolidated Statements of Shareholders' Equity for each of the three years in the period ended October 31, 2025 Consolidated Statements of Cash Flows for each of the three years in the period ended October 31, 2025 Notes to Consolidated Financial Statements…
• FY2025 10-K: …financial statements include the accounts of Nordson Corporation and its 100%-owned and controlled subsidiaries. Investments in affiliates and joint ventures in which our ownership is 50 percent or less or in which we do not have control but have the ability to exercise significant influence, are accounted for under…
• GGG (GRACO INC.)
• FY2025 10-K: …acquisition had been completed at the beginning of fiscal year 2023 (in thousands, except per share amounts): 2024 2023 Net sales $ 2,218,982 $ 2,316,030 Net earnings 489,109 501,114 Earnings per share Basic $ 2.90 $ 2.97 Diluted $ 2.84 $ 2.91 The unaudited pro forma information includes the impact of intangible…
• FY2025 10-K: (Incorporated by reference to Exhibit 10.1 to the Company's Report on Form 8-K filed May 23, 2023.) 10.21 Amendment No. 2 to Amended and Restated Credit Agreement, dated June 8, 2023, among Graco Inc., the borrowing subsidiaries from time to time party thereto, the banks from time to time party thereto and U.S. Bank…
• IEX (IDEX CORP)
• FY2025 10-K: …information, refer to Note 2 , "Acquisitions and Divestitures," in the Notes to Consolidated Financial Statements. Other Expense (Income) - Net Other expense (income) - net in both periods primarily reflects the impact of foreign currency transactions. Interest Expense - Net Interest expense - net increased primarily…
• FY2025 10-K: …price of Micro-LAM, resulting in a reduction to the purchase price of $ 0.3 million. The acquired intangible assets and weighted average amortization periods are as follows: Total Weighted Average Life (in years) Trade names $ 5.3 15 Customer relationships 21.1 11 Technology 18.4 12 Acquired intangible assets $ 44.8…
• DCI (DONALDSON COMPANY, INC.)
• FY2025 10-K: …the proceeds of the term loan facility, and (v) the incremental credit facility option was increased from $250.0 million to $350.0 million and may be in the form of an increase to the revolving credit facility and/or incremental term loans. Working Capital In order to help measure and analyze the impact of working…
• FY2025 10-K: 367.0 367.0 Foreign currency translation 29.6 29.6 Pension liability adjustment, net of deferred taxes ( 7.5 ) ( 7.5 ) Losses on hedging derivatives, net of deferred taxes ( 4.2 ) ( 4.2 ) Reclassification of losses on hedging derivatives to net earnings 0.3 0.3 Comprehensive income 385.2 Treasury stock acquired (…
• FELE (FRANKLIN ELECTRIC CO., INC.)
• FY2025 10-K: The Company's Level 1 cash equivalents assets are generally comprised of foreign bank guaranteed certificates of deposit and short term deposits. The Company's Level 1 marketable securities assets are comprised of short term investment funds. The marketable securities asset is recorded within the "Other current…
• FY2025 10-K: …of material events, conduct of business, inspection of property, maintenance of insurance, compliance with laws and most favored lender obligations. The negative covenants include limitations on loans, advances and investments, and the 38 granting of liens by the Company or its subsidiaries, as well as prohibitions…
• TTC (THE TORO COMPANY)
• FY2025 10-K: …(loss) from a wholly-owned domestic distribution company, certain corporate activities, and the elimination of intersegment revenues and expenses. Net sales of our reportable segments and Other activities accounted for the following percentages of our consolidated net sales for fiscal 2025: Professional, 80.3…
• FY2025 10-K: …supported by an extensive service network. The following are the company's significant accounting policies in addition to those included in the other Notes to Consolidated Financial Statements included within this Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.…
• GTLS (CHART INDUSTRIES, INC.)
• FY2025 10-K: …if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Investments in equity securities are included within other assets in our consolidated balance sheets. Customer Advances and Billings in Excess of Contract…
• FY2025 10-K: …and CO2 capture among other applications. Chart is committed to excellence in ESG issues both for its company as well as its customers. With 62 global manufacturing locations and over 50 service centers from the United States to Asia, Australia, India, Europe the Middle East, Africa and South America, we maintain…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.