Donaldson (NYSE: DCI) and PMFG (NASDAQ:PMFG) are both industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, risk, profitability, dividends and earnings.

Institutional and Insider Ownership

77.9% of Donaldson shares are held by institutional investors. 0.9% of Donaldson shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Donaldson pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. PMFG does not pay a dividend. Donaldson pays out 41.4% of its earnings in the form of a dividend. Donaldson has raised its dividend for 32 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and price targets for Donaldson and PMFG, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Donaldson 0 4 1 0 2.20
PMFG 0 0 0 0 N/A

Donaldson presently has a consensus target price of $48.67, indicating a potential upside of 8.85%. Given Donaldson’s higher possible upside, analysts clearly believe Donaldson is more favorable than PMFG.

Valuation & Earnings

This table compares Donaldson and PMFG’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Donaldson $2.31 billion 2.54 $402.70 million $1.74 25.70
PMFG N/A N/A N/A N/A N/A

Donaldson has higher revenue and earnings than PMFG.

Profitability

This table compares Donaldson and PMFG’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Donaldson 9.81% 28.14% 12.15%
PMFG -17.71% -31.49% -16.26%

Summary

Donaldson beats PMFG on 10 of the 11 factors compared between the two stocks.

Donaldson 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.

PMFG Company Profile

PMFG, Inc. is a provider of custom-engineered systems and products designed for the delivery of energy. The Company operates in two segments: Process Products and Environmental Systems. The Process Products segment produces specialized systems and products that remove contaminants from gases and liquids, reducing maintenance and extending the life of energy infrastructure. The Process Products segment also includes industrial silencing equipment to control noise pollution on a range of industrial equipment and pulsation dampeners that reduce vibration. The Environmental Systems segment designs, engineers and installs systems for combustion modification, fuel conversions and post-combustion nitrogen oxide (NOX) control for both new and existing sources. The Company’s environmental control systems are used for air pollution abatement and converting burners to accommodate alternative sources of fuel.

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