Northern Technologies International Corporation (NASDAQ: NTIC) and Donaldson Company (NYSE:DCI) are both basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitabiliy, risk, analyst recommendations, valuation, institutional ownership and dividends.

Profitability

This table compares Northern Technologies International Corporation and Donaldson Company’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northern Technologies International Corporation 0.43% 4.33% 3.97%
Donaldson Company 9.72% 28.12% 12.14%

Volatility and Risk

Northern Technologies International Corporation has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, Donaldson Company has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500.

Dividends

Donaldson Company pays an annual dividend of $0.70 per share and has a dividend yield of 1.5%. Northern Technologies International Corporation does not pay a dividend. Donaldson Company pays out 41.9% of its earnings in the form of a dividend. Northern Technologies International Corporation has increased its dividend for 32 consecutive years.

Valuation and Earnings

This table compares Northern Technologies International Corporation and Donaldson Company’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Northern Technologies International Corporation $36.65 million 1.91 -$2.08 million $0.04 387.50
Donaldson Company $2.31 billion 2.59 $402.70 million $1.67 27.31

Donaldson Company has higher revenue and earnings than Northern Technologies International Corporation. Donaldson Company is trading at a lower price-to-earnings ratio than Northern Technologies International Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

25.6% of Northern Technologies International Corporation shares are held by institutional investors. Comparatively, 78.8% of Donaldson Company shares are held by institutional investors. 19.0% of Northern Technologies International Corporation shares are held by company insiders. Comparatively, 0.9% of Donaldson Company shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Northern Technologies International Corporation and Donaldson Company, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northern Technologies International Corporation 0 0 0 0 N/A
Donaldson Company 0 4 1 0 2.20

Donaldson Company has a consensus price target of $47.00, indicating a potential upside of 3.07%. Given Donaldson Company’s higher possible upside, analysts clearly believe Donaldson Company is more favorable than Northern Technologies International Corporation.

Summary

Donaldson Company beats Northern Technologies International Corporation on 11 of the 16 factors compared between the two stocks.

Northern Technologies International Corporation Company Profile

Northern Technologies International Corporation develops and markets environmentally beneficial products and services. The Company’s primary business is corrosion prevention marketed mainly under ZERUST and EXCOR brands (collectively ZERUST). The Company’s segments include ZERUST and Natur-Tec. The Company is engaged in selling its ZERUST products and services to the automotive, electronics, electrical, mechanical, military and retail consumer markets. The Company’s ZERUST rust and corrosion inhibiting products include plastic and paper packaging, liquids and coatings, rust removers and cleaners, diffusers and engineered solutions designed specifically for the oil and gas industry. The Company also offers onsite technical consulting for rust and corrosion prevention issues across the world. The Company manufactures and sells a range of bio-based and compostable (fully biodegradable) polymer resin compounds and finished products under the Natur-Tec brand.

Donaldson Company Company Profile

Donaldson Company, Inc. is a manufacturer of filtration systems and replacement parts. The Company’s segments include Engine Products, Industrial Products and Corporate. The Company’s products are manufactured at approximately 44 plants around the world and through three joint ventures. The Company offers its products under the Ultra-Web, PowerCore and Donaldson brands. The Engine Products segment sells its products to original equipment manufacturers (OEMs) in the construction, mining, agriculture, aerospace, defense and truck end-markets and to independent distributors, OEM dealer networks, private label accounts and large equipment fleets. The Industrial Products segment sells to various industrial dealers, distributors, OEMs of gas-fired turbines and OEMs and end users requiring clean air. Its products include dust, fume and mist collectors, compressed air purification systems, air filtration systems for gas turbines and polytetrafluoroethylene (PTFE) membrane-based products.

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