Critical Survey: Donaldson (NYSE:DCI) versus Atmus Filtration Technologies (NYSE:ATMU)

Donaldson (NYSE:DCI) and Atmus Filtration Technologies (NYSE:ATMU) are both mid-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.

Analyst Recommendations

This is a breakdown of recent ratings for Donaldson and Atmus Filtration Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Donaldson	0	3	2	0	2.40
Atmus Filtration Technologies	0	2	4	0	2.67

Donaldson currently has a consensus price target of $100.20, suggesting a potential upside of 22.45%. Atmus Filtration Technologies has a consensus price target of $62.67, suggesting a potential upside of 33.99%. Given Atmus Filtration Technologies’ stronger consensus rating and higher probable upside, analysts plainly believe Atmus Filtration Technologies is more favorable than Donaldson.

Dividends

Donaldson pays an annual dividend of $1.20 per share and has a dividend yield of 1.5%. Atmus Filtration Technologies pays an annual dividend of $0.22 per share and has a dividend yield of 0.5%. Donaldson pays out 37.5% of its earnings in the form of a dividend. Atmus Filtration Technologies pays out 8.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Donaldson has raised its dividend for 38 consecutive years. Donaldson is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Donaldson has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500. Comparatively, Atmus Filtration Technologies has a beta of 1.47, suggesting that its share price is 47% more volatile than the S&P 500.

Earnings & Valuation

This table compares Donaldson and Atmus Filtration Technologies”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Donaldson	$3.69 billion	2.57	$367.00 million	$3.20	25.57
Atmus Filtration Technologies	$1.76 billion	2.16	$207.40 million	$2.55	18.34

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

Profitability

This table compares Donaldson and Atmus Filtration Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Donaldson	10.09%	29.85%	14.88%
Atmus Filtration Technologies	11.56%	64.29%	15.78%

Insider & Institutional Ownership

82.8% of Donaldson shares are owned by institutional investors. Comparatively, 32.7% of Atmus Filtration Technologies shares are owned by institutional investors. 2.2% of Donaldson shares are owned by company insiders. Comparatively, 0.4% of Atmus Filtration Technologies shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Donaldson beats Atmus Filtration Technologies on 9 of the 17 factors compared between the two stocks.

About Donaldson

Donaldson Company, Inc. manufactures and sells filtration systems and replacement parts worldwide. The company operates through three segments: Mobile Solutions, Industrial Solutions, and Life Sciences. Its Mobile Solutions segment provides replacement filters for air and liquid filtration applications, such as air filtration systems; liquid filtration systems for fuel, lube, and hydraulic applications; exhaust and emissions systems and sensors; indicators; and monitoring systems. This segment sells its products to original equipment manufacturers (OEMs) in the construction, mining, agriculture, aerospace, defense, and transportation markets; and to independent distributors, and OEM dealer networks. The company's Industrial Solutions segment offers dust, fume, and mist collectors; compressed air and industrial gasses purification systems; and hydraulic and lubricated rotating equipment applications, as well as gas and liquid filtration for industrial processes. This segment sells its products to various distributors, OEMs, and end-users. Its Life Sciences segment provides micro-environment gas and liquid filtration for food, beverage, and industrial processes; bioprocessing equipment, that includes bioreactors and fermenters; and bioprocessing consumables, such as chromatography devices, reagents and filters, and polytetrafluoroethylene membrane-based products, as well as specialized air and gas filtration systems for applications, including hard disk drives, semi-conductor manufacturing and sensors, battery systems, and powertrain components to OEMs and various end-users. The company was founded in 1915 and is headquartered in Bloomington, Minnesota.

About Atmus Filtration Technologies

Atmus Filtration Technologies Inc. designs, manufactures, and sells filtration products under the Fleetguard brand name in North America, Europe, South America, Asia, Australia, Africa, and internationally. The company offers fuel filters, lube filters, air filters, crankcase ventilation, hydraulic filters, coolants, and fuel additives, as well as other chemicals; and fuel water separators and other filtration systems to original equipment manufacturers, dealers/distributors, and end-users. Its products are used in on-highway commercial vehicles and off-highway agriculture, construction, mining, and power generation vehicles and equipment. The company was founded in 1958 and is headquartered in Nashville, Tennessee.