Atmus Filtration Technologies, Inc. (ATMU) AI Stock Analysis

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Atmus Filtration Technologies, Inc.

(NYSE:ATMU)

64Neutral

Atmus Filtration Technologies, Inc. shows a robust financial performance with strengths in revenue growth and profitability, balanced by high leverage risks. Technical indicators suggest bearish trends, which could pose short-term challenges. Valuation metrics indicate fair valuation, while the earnings call provides a stable outlook with strategic growth initiatives. Overall, the stock demonstrates a solid foundation but needs to carefully manage leverage and market conditions.

Positive Factors

Financial Performance

ATMU continues to beat guidance and expectations despite a market downcycle.

Market Position

ATMU is well positioned to leverage with share gains.

Negative Factors

Market Conditions

Both the Aftermarket and First Fit markets are in a synchronized downturn, which is atypical compared to historical trends.

Tariff Risk

Tariff considerations present overhang risk on uncertainty heading into the transition to a Trump administration, with about 30% of revenue from products made in Mexico.

Atmus Filtration Technologies, Inc. (ATMU) vs. S&P 500 (SPY)

Market Cap

$2.84B

Dividend Yield0.45%

Average Volume (3M)1.05M

Price to Earnings (P/E)15.5

Beta (1Y)1.15

Revenue Growth2.55%

EPS Growth8.40%

CountryUS

Employees4,500

SectorIndustrials

Sector Strength64

IndustryIndustrial - Pollution & Treatment Controls

Share Statistics

EPS (TTM)2.22

Shares Outstanding82,663,925

10 Day Avg. Volume952,906

30 Day Avg. Volume1,046,990

Financial Highlights & Ratios

PEG Ratio1.84

Price to Book (P/B)N/A

Price to Sales (P/S)1.86

Price to Cash Flow (P/CF)38.90

P/FCF Ratio38.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$41.80

Price Target Upside21.62% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Atmus Filtration Technologies, Inc. Business Overview & Revenue Model

Company DescriptionAtmus Filtration Technologies, Inc. (ATMU) is a company that specializes in the development and production of high-performance filtration solutions. The company operates within the industrial and automotive sectors, providing essential filtration technologies that enhance the efficiency and sustainability of engines and equipment. Their core products include air, fuel, hydraulic, and lube filtration products, which are critical in maintaining the performance and longevity of engines across various applications.

How the Company Makes MoneyAtmus Filtration Technologies, Inc. generates revenue through the sale of its filtration products to original equipment manufacturers (OEMs) and aftermarket customers. The company's key revenue streams include direct sales of filtration systems and components tailored for specific industrial applications and automotive engines. Additionally, Atmus engages in partnerships with major manufacturers to integrate their filtration solutions into new engine designs, which ensures a consistent demand for their products. Aftermarket sales provide a steady stream of revenue as customers require regular replacements and upgrades to maintain optimal engine performance. Furthermore, the company's ongoing investment in research and development allows it to innovate and offer cutting-edge filtration technologies, thereby sustaining its competitive edge and market share.

Atmus Filtration Technologies, Inc. Financial Statement Overview

Summary

Atmus Filtration Technologies demonstrates strong revenue growth and profitability, with effective operational efficiency. However, high debt levels pose a potential risk, highlighting the importance of careful management of financial leverage. Cash flow is stable, albeit with some room for improvement in free cash flow growth. Overall, the company's financial health is robust, with strengths in revenue and profit margins, but it must manage leverage effectively to mitigate risks.

Income Statement

Very Positive

Atmus Filtration Technologies, Inc. shows a solid financial performance with a consistent increase in revenue over the years, reflecting a healthy revenue growth rate. The gross profit margin is stable, indicating good cost management. The EBIT and EBITDA margins are strong, reflecting effective operational efficiency. The net profit margin is also healthy, showing good profitability. Overall, the income statement indicates a positive growth trajectory and profitability.

Balance Sheet

Positive

The balance sheet reveals a high debt-to-equity ratio, which indicates a significant reliance on debt financing. However, the company's return on equity is strong, demonstrating efficient use of shareholder funds to generate profits. The equity ratio is relatively low, suggesting a high level of liabilities compared to assets, which could be a risk if not managed properly. Overall, the balance sheet shows potential risks due to leverage but demonstrates efficient use of equity.

Cash Flow

Positive

Operating cash flow remains positive, although there is a decrease in free cash flow growth, which could be a concern for future cash liquidity. The operating cash flow to net income ratio is healthy, indicating good cash conversion from earnings. The free cash flow to net income ratio is also favorable, showing that the company is generating adequate free cash flow relative to net income. Overall, cash flow is stable but shows potential areas for improvement in free cash flow growth.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.67B	1.63B	1.56B	1.44B	1.23B
	Gross Profit
462.10M	443.50M	361.40M	350.50M	309.40M
	EBIT
266.20M	248.40M	191.30M	214.70M	199.00M
	EBITDA
266.20M	273.70M	234.30M	239.60M	221.70M
	Net Income Common Stockholders
185.60M	171.30M	128.00M	170.10M	142.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
184.30M	168.00M	-9.40M	-9.80M	17.70M
	Total Assets
1.19B	1.09B	879.40M	848.30M	786.90M
	Total Debt
592.50M	625.90M	9.40M	9.80M	20.20M
	Net Debt
408.20M	457.90M	18.80M	19.60M	37.90M
	Total Liabilities
962.90M	1.01B	429.90M	411.10M	339.30M
	Stockholders Equity
227.40M	80.70M	449.50M	437.20M	447.60M
Cash Flow		Free Cash Flow
56.80M	143.20M	143.60M	170.40M	186.60M
	Operating Cash Flow
105.40M	189.00M	177.00M	202.30M	213.10M
	Investing Cash Flow
-48.60M	-45.80M	-33.40M	-31.90M	-26.50M
	Financing Cash Flow
-35.80M	24.80M	-143.60M	-170.40M	-186.60M

Atmus Filtration Technologies, Inc. Technical Analysis

Technical Analysis Sentiment

Negative

Last Price34.37

Price Trends

50DMA

36.68

Negative

100DMA

38.78

Negative

200DMA

37.38

Negative

Market Momentum

MACD

-1.08

Negative

RSI

47.55

Neutral

STOCH

56.17

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ATMU, the sentiment is Negative. The current price of 34.37 is below the 20-day moving average (MA) of 34.43, below the 50-day MA of 36.68, and below the 200-day MA of 37.38, indicating a bearish trend. The MACD of -1.08 indicates Negative momentum. The RSI at 47.55 is Neutral, neither overbought nor oversold. The STOCH value of 56.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ATMU.

Atmus Filtration Technologies, Inc. Risk Analysis

Atmus Filtration Technologies, Inc. disclosed 46 risk factors in its most recent earnings report. Atmus Filtration Technologies, Inc. reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Atmus Filtration Technologies, Inc. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FSS	78 Outperform	$4.69B	21.88	19.77%	0.66%	8.06%	36.93%
ZWS	72 Outperform	$5.68B	34.49	10.49%	1.04%	3.22%	38.39%
ERII	71 Outperform	$833.67M	37.95	10.73%	―	12.93%	7.08%
ATMU	64 Neutral	$2.84B	15.48	120.48%	0.45%	2.55%	8.40%
CECO	63 Neutral	$683.21M	54.53	5.39%	―	2.40%	-0.38%
Sector *	63 Neutral	$4.26B	11.28	5.43%	215.24%	4.12%	-8.73%
PCT	38 Underperform	$1.21B	―	-96.27%	―	―	-180.10%

* Industrials Sector Average

Performance Comparison

ATMU

Atmus Filtration Technologies, Inc.

34.27

3.10

9.95%

CECO

Ceco Environmental

19.93

-5.39

-21.29%

ERII

Energy Recovery

15.17

0.97

6.83%

FSS

Federal Signal

75.26

-8.13

-9.75%

ZWS

Zurn Water Solutions

33.86

2.47

7.87%

PCT

PureCycle Technologies

6.74

1.76

35.34%

Atmus Filtration Technologies, Inc. Earnings Call Summary

Earnings Call Date: Feb 21, 2025 | % Change Since: -12.16% | Next Earnings Date: May 2, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a balanced sentiment with strong financial performance and strategic achievements, such as margin expansion and successful product launches, offset by challenges including soft market conditions, restructuring costs, and persistent weakness in China.

Highlights

Completion of Common Share Exchange

In March 2024, Atmus Filtration Technologies completed a common share exchange, becoming a fully independent company for the first time in its history. This move has accelerated their growth strategy and market outperformance.

Strong Financial Performance

Fourth quarter sales increased by 1.8% to $407 million, and adjusted EBITDA was $78 million or 19.1%, compared to $71 million or 17.9% in the prior period.

Adjusted EBITDA Margin Expansion

Since 2022, adjusted EBITDA margin expanded by 410 basis points, demonstrating the success of supply chain transformation and cost reduction efforts.

Fleetguard Brand Expansion

Expansion of product coverage with the Fleetguard brand through new channels and high-growth geographies, including a successful Latin American customer event.

Launch of NanoNet N3

Expanded technology leadership in fuel filtration with the launch of the next-generation NanoNet N3 media, enabling compact filter designs and superior service life.

Lowlights

Soft End Market Conditions

Despite strong outperformance, Atmus is experiencing soft end market conditions in both aftermarket and first fit markets, leading to restructuring actions.

Restructuring Costs

Incurred $4 million in one-time restructuring costs associated with employee severance in response to soft market conditions in the US and China.

Continued Weakness in China

Anticipated weak market conditions in China to persist, impacting growth and requiring structural actions in the region.

Foreign Exchange Headwinds

Foreign exchange impacted sales and is expected to result in approximately a 2% revenue headwind for 2025.

Company Guidance

During the Atmus Filtration Technologies fourth quarter and full year 2024 earnings call, CEO Steph Disher outlined the company's strong financial performance and forward-looking strategies. The company reported a 1.8% increase in fourth-quarter sales to $407 million, with an adjusted EBITDA of $78 million or 19.1%, and adjusted earnings per share of $0.58. For the full year, sales rose by 2.5% to $1.67 billion, and adjusted EBITDA was $330 million, with an adjusted EBITDA margin of 19.7%. Despite soft market conditions, Atmus outperformed the market by approximately two percentage points in 2024 and anticipates global market growth of flat to 4% in 2025. The company also reported repurchasing $20 million of stock and has $130 million remaining under board authorization. In 2025, Atmus expects adjusted EBITDA margins to remain in the range of 19% to 20%, with adjusted EPS projected between $2.35 and $2.60. The company's growth strategy includes expanding its share in the first fit market, enhancing aftermarket growth, transforming the supply chain, and entering the industrial filtration market, all while navigating ongoing global economic uncertainties.

Atmus Filtration Technologies, Inc. Corporate Events

Dividends

Atmus Filtration Declares Quarterly Cash Dividend

Positive

Feb 19, 2025

On February 19, 2025, Atmus Filtration Technologies announced that its Board of Directors declared a quarterly cash dividend of $0.05 per common share, to be paid on March 19, 2025, to shareholders on record as of March 4, 2025. This move reflects the company’s commitment to delivering shareholder value, potentially strengthening its market position and signaling financial stability to stakeholders.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.