Donaldson (NYSE:DCI – Get Free Report) and Sandvik (OTCMKTS:SDVKY – Get Free Report) are both industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Donaldson and Sandvik, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Donaldson | 0 | 2 | 3 | 0 | 2.60 |
| Sandvik | 1 | 6 | 5 | 0 | 2.33 |
Donaldson currently has a consensus target price of $101.67, suggesting a potential upside of 19.97%. Given Donaldson’s stronger consensus rating and higher probable upside, equities analysts clearly believe Donaldson is more favorable than Sandvik.
Dividends
Donaldson pays an annual dividend of $1.28 per share and has a dividend yield of 1.5%. Sandvik pays an annual dividend of $0.42 per share and has a dividend yield of 1.2%. Donaldson pays out 33.2% of its earnings in the form of a dividend. Sandvik pays out 25.8% 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.
Profitability
This table compares Donaldson and Sandvik’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Donaldson | 11.68% | 28.68% | 14.27% |
| Sandvik | 13.85% | 20.30% | 11.08% |
Institutional and Insider Ownership
82.8% of Donaldson shares are held by institutional investors. Comparatively, 0.7% of Sandvik shares are held by institutional investors. 2.2% of Donaldson shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Risk & Volatility
Donaldson has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Sandvik has a beta of 1.51, suggesting that its stock price is 51% more volatile than the S&P 500.
Earnings & Valuation
This table compares Donaldson and Sandvik”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Donaldson | $3.89 billion | 2.53 | $453.80 million | $3.85 | 22.01 |
| Sandvik | $12.34 billion | 3.54 | $1.50 billion | $1.63 | 21.37 |
Sandvik has higher revenue and earnings than Donaldson. Sandvik is trading at a lower price-to-earnings ratio than Donaldson, indicating that it is currently the more affordable of the two stocks.
Summary
Donaldson beats Sandvik on 10 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 Sandvik
Sandvik AB (publ), an engineering company, provides products and solutions for mining and rock excavation, metal cutting, and materials technology worldwide. The company offers mining and rock excavation equipment, including drill rigs and bolters, underground loaders and trucks, mechanical cutting equipment, rock tools and rock drills, and mining automation; rock processing equipment, such as crushers, screens, hydraulic breakers, demolition tools, and breaker booms. It also provides metal-cutting tools and tooling systems, and digital solutions and software; metal powder for additive manufacturing, and components made from controlled expansion alloys; and tungsten powders, as well as recycling services of secondary tungsten raw materials. The company serves aerospace, automotive, energy, general engineering, infrastructure, and mining industries. Sandvik AB (publ) was founded in 1862 and is headquartered in Stockholm, Sweden.
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