Critical Analysis: Atmus Filtration Technologies (NYSE:ATMU) vs. Franklin Electric (NASDAQ:FELE)

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

Institutional and Insider Ownership

80.0% of Franklin Electric shares are owned by institutional investors. Comparatively, 32.7% of Atmus Filtration Technologies shares are owned by institutional investors. 2.9% of Franklin Electric 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 stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Franklin Electric and Atmus Filtration Technologies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin Electric	0	3	0	0	2.00
Atmus Filtration Technologies	0	3	3	0	2.50

Franklin Electric presently has a consensus price target of $114.50, suggesting a potential upside of 19.70%. Atmus Filtration Technologies has a consensus price target of $62.00, suggesting a potential upside of 38.35%. Given Atmus Filtration Technologies’ stronger consensus rating and higher possible upside, analysts clearly believe Atmus Filtration Technologies is more favorable than Franklin Electric.

Dividends

Franklin Electric pays an annual dividend of $1.12 per share and has a dividend yield of 1.2%. Atmus Filtration Technologies pays an annual dividend of $0.24 per share and has a dividend yield of 0.5%. Franklin Electric pays out 32.3% of its earnings in the form of a dividend. Atmus Filtration Technologies pays out 9.2% 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. Franklin Electric has increased its dividend for 33 consecutive years. Franklin Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Franklin Electric has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, Atmus Filtration Technologies has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500.

Valuation and Earnings

This table compares Franklin Electric and Atmus Filtration Technologies”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin Electric	$2.13 billion	1.98	$147.09 million	$3.47	27.57
Atmus Filtration Technologies	$1.76 billion	2.07	$207.40 million	$2.61	17.17

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Franklin Electric	7.06%	15.18%	10.13%
Atmus Filtration Technologies	11.32%	59.85%	14.66%

Summary

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

About Franklin Electric

Franklin Electric Co., Inc., together with its subsidiaries, designs, manufactures, and distributes water and fuel pumping systems worldwide. The company operates through Water Systems, Fueling Systems, and Distribution segments. The Water Systems segment offers submersible motors, drives, pumps, electronic controls, water treatment systems, monitoring devices, and related parts and equipment. Its motors and pumps are used principally for pumping clean water and wastewater in various residential, agricultural, municipal, and industrial applications; and manufactures electronic drives and controls that are used in motors for controlling functionality, as well as provides protection from various hazards, such as electrical surges, over-heating, and dry wells or tanks. The Fueling Systems segment provides pumps, pipes, sumps, fittings, vapor recovery components, electronic controls, monitoring devices, and related parts and equipment primarily for use in fueling system applications. This segment serves other energy markets, such as power reliability systems, as well as includes electronic devices for online monitoring of the power utility, hydroelectric, and telecommunication and data center infrastructure. The Distribution segment sells to and provides presale support and specifications to the installing contractors. It sells products produced by the Water Systems segment. The company sells its products to wholesale and retail distributors, specialty distributors, original equipment manufacturers, industrial and petroleum equipment distributors, and oil and utility companies through its employee sales force and independent manufacturing representatives. Franklin Electric Co., Inc. was founded in 1944 and is headquartered in Fort Wayne, Indiana.

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.