Financial Analysis: Atmus Filtration Technologies (NYSE:ATMU) vs. Donaldson (NYSE:DCI)

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atmus Filtration Technologies	$1.76 billion	2.32	$207.40 million	$2.55	19.63
Donaldson	$3.75 billion	2.62	$367.00 million	$3.20	26.49

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.

Volatility and Risk

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

Dividends

Atmus Filtration Technologies pays an annual dividend of $0.22 per share and has a dividend yield of 0.4%. Donaldson pays an annual dividend of $1.20 per share and has a dividend yield of 1.4%. Atmus Filtration Technologies pays out 8.6% of its earnings in the form of a dividend. Donaldson pays out 37.5% 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 increased its dividend for 38 consecutive years. Donaldson is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent ratings for Atmus Filtration Technologies and Donaldson, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atmus Filtration Technologies	0	3	4	0	2.57
Donaldson	0	3	2	0	2.40

Atmus Filtration Technologies presently has a consensus target price of $56.75, indicating a potential upside of 13.36%. Donaldson has a consensus target price of $100.20, indicating a potential upside of 18.20%. Given Donaldson’s higher possible upside, analysts plainly believe Donaldson is more favorable than Atmus Filtration Technologies.

Profitability

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

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

Institutional and Insider Ownership

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

Summary

Donaldson beats Atmus Filtration Technologies on 10 of the 17 factors compared between the two stocks.

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.

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.