Donaldson (NYSE:DCI – Get Free Report) and Tetra Tech (NASDAQ:TTEK – Get Free Report) are both mid-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, dividends and valuation.
Dividends
Donaldson pays an annual dividend of $1.20 per share and has a dividend yield of 1.5%. Tetra Tech pays an annual dividend of $0.26 per share and has a dividend yield of 0.7%. Donaldson pays out 39.3% of its earnings in the form of a dividend. Tetra Tech pays out 32.5% 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 raised its dividend for 38 consecutive years and Tetra Tech has raised its dividend for 11 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 current ratings for Donaldson and Tetra Tech, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Donaldson | 1 | 1 | 1 | 0 | 2.00 |
| Tetra Tech | 0 | 2 | 2 | 0 | 2.50 |
Insider and Institutional Ownership
82.8% of Donaldson shares are owned by institutional investors. Comparatively, 93.9% of Tetra Tech shares are owned by institutional investors. 2.7% of Donaldson shares are owned by company insiders. Comparatively, 0.4% of Tetra Tech shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Risk and Volatility
Donaldson has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Tetra Tech has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500.
Profitability
This table compares Donaldson and Tetra Tech’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Donaldson | 9.94% | 29.50% | 14.79% |
| Tetra Tech | 3.94% | 24.70% | 9.99% |
Valuation and Earnings
This table compares Donaldson and Tetra Tech”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Donaldson | $3.69 billion | 2.55 | $367.00 million | $3.05 | 26.53 |
| Tetra Tech | $5.20 billion | 1.83 | $333.38 million | $0.80 | 45.18 |
Donaldson has higher earnings, but lower revenue than Tetra Tech. Donaldson is trading at a lower price-to-earnings ratio than Tetra Tech, indicating that it is currently the more affordable of the two stocks.
Summary
Donaldson beats Tetra Tech 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 Tetra Tech
Tetra Tech, Inc. provides consulting and engineering services in the United States and internationally. The company operates through two segments, Government Services Group (GSG) and Commercial/International Services Group (CIG). The GSG segment offers early data collection and monitoring, data analysis and information management, science and engineering applied research, engineering design, project management, and operations and maintenance services; and climate change and energy management consulting, as well as greenhouse gas inventory assessment, certification, reduction, and management services. This segment serves federal, state, and local governments; and development agencies in water resources analysis and water management, environmental monitoring, data analytics, government consulting, waste management, and a range of civil infrastructure master planning and engineering design markets. The CIG segment provides early data collection and monitoring, data analysis and information management, feasibility studies and assessments, science and engineering applied research, engineering design, project management, and operations and maintenance services; and environmental remediation and reconstruction services, and industrial water treatment services. This segment serves natural resources, energy, and utilities markets, as well as sustainable infrastructure master planning and engineering design for facilities, transportation, and local development projects. Tetra Tech, Inc. was founded in 1966 and is headquartered in Pasadena, California.
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