Atmus Filtration Technologies Inc. (ATMU): what the price assumes

In the published model solve dated 2026-Q2, anchored at $47.73, Atmus Filtration Technologies Inc. (ATMU) is priced for +8.3% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/ATMU

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.6% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.

Per-Model Detail (n=18)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Roughly seven of every eight sales dollars come from replacement parts rather than new equipment, since the company estimates that "approximately 86% of our net sales in 2025 were generated in the aftermarket, where our" products go in as replacement or repair parts, with first-fit sales to vehicle makers making up the rest.
• The customer list is short and old at the same time: top customers "in the aggregate accounted for approximately 70% of Atmus' net sales in 2025 and have consistently accounted for more than 67% of Atmus' net sales in each of the last five years", concentrated among Cummins, PACCAR and the Traton Group.
• The near-term watch item is the composition of growth, because first-quarter 2026 sales of $477.5 million came in 14.6% higher on the Koch Filter acquisition, currency and pricing while underlying volumes went the other way.

Bull Case

Take the objection first, because it is the reason this company is cheap enough to argue about. Atmus makes filters for diesel engines. Diesel engines are the technology every regulator in the developed world has spent a decade trying to replace, and Atmus's largest customer has publicly committed to reducing the emissions of what it sells. The filing itself acknowledges that Cummins "may result in Cummins preferring products that reduce its direct and/or indirect GHG emissions". On the face of it, this is a business selling consumables into a shrinking installed base.

Now look at where the money actually comes from. The company estimates that "approximately 86% of our net sales in 2025 were generated in the aftermarket, where our" products are installed as replacement or repair parts, against roughly 14% sold as components on new vehicles. That ratio changes what the electrification question means. A truck built today runs for a decade or two and needs its fuel, lube and air filters changed on a schedule set by the engine maker, not by the fleet's environmental ambitions. Even in a world where every new truck sold from tomorrow ran on something else, the filters on the trucks already out there would keep being replaced for years. The first-fit line is the one exposed to the transition; it is the smaller line by a factor of six.

The second thing worth noticing is that Atmus makes its own filter media. It has the capability "to manufacture a large portion of its proprietary filtration media", and the technologies have names because they are engineered products rather than stamped metal: "StrataPore, NanoNet, NanoForce, NanoNet Plus and most recently, NanoNet N3 product families". That is why a filter specified onto an engine platform is difficult to substitute cheaply, and why the aftermarket revenue attaches to the equipment rather than to the distributor.

The profitability shows it. Atmus converts 17.0% of revenue into operating profit on a trailing basis. DCI, the largest listed filtration business and the natural comparison, earns 15.1% on $3.81 billion of revenue. Further out into the components cohort the numbers fall away: DORM earns 12.9%, MOD 10.8%, ALV 9.7% and PHIN 7.3%. The smaller, more focused business is out-earning almost everything around it, which is the signature of a product with real specification power rather than a commodity moving through a distribution network.

Growth has been steady rather than dramatic and has come from the right places. Fiscal 2025 net sales were "$1,764.3 million for the year ended December 31, 2025, an increase of $94.7 million compared to $1,669.6 million for the year ended December 31, 2024", and the filing attributes that to "higher volumes of $51.9 million and favorable pricing impacts of $50.0 million, partially offset by unfavorable impacts of currency". Volume and price contributed roughly equally. A business that can raise price without losing volume is describing its own competitive position more clearly than any strategy slide.

The concession the bull has to make is that the customer list is very short. Three names carry most of the revenue. What softens it is duration: these are relationships measured in decades, defined by supply agreements rather than by purchase orders, and switching a specified filter across a global service network is a project rather than a decision.

Bear Case

The competitive problem is not a newcomer with better technology. It is that Atmus is the small company in a business where the large one has scale in exactly the places scale matters. DCI runs $3.81 billion of revenue against Atmus at $1.83 billion, sells into industrial and aerospace filtration as well as engines, and can absorb distribution and R&D costs across a wider base. Atmus is roughly half its size and is competing for the same aftermarket shelf space through many of the same distributors.

Behind that sits the more specific structural risk, which is that the company's biggest customer is also its former parent and its most important competitor for the aftermarket dollar. The relationship is contractual and finite. The 10-K states that "our relationship with Cummins is defined by our first-fit supply agreement and aftermarket supply agreement, we may fail in the future to renew these contracts", and it lists among its principal business risks "Significant customer concentration among Cummins, PACCAR, and the Traton Group" and "The loss of a top OEM relationship or changes in the preferences of Atmus' aftermarket end-users". Those three names carry roughly 70% of sales. A filtration company whose route to the truck runs through three engine makers does not set its own terms.

The most recent quarter is where the concern stops being theoretical. Sales of $477.5 million were up 14.6% year on year, but the increase came from the Koch Filter acquisition completed in January 2026, from currency and from pricing, with underlying volumes moving lower. Acquired revenue and price increases are real revenue. They are not the same thing as more filters going into more engines, and the market read the accompanying full-year guidance the same way, marking the shares down despite the beat.

That matters because of what the price is asking for. At about 17 times company-wide operating income, the quote embeds operating profit compounding at roughly 15.9% a year across a five-year run. Among comparable fast-growers, only around 43% managed that pace over such a stretch, and this is a company whose volume line is currently negative. The gap between what the price wants and what the volume line is delivering has to be closed by price increases, acquisitions, or margin, and only one of those compounds indefinitely.

The valuation methods split accordingly. Only the forward-growth family reaches today's price. The peer-multiple methods leave the price about 32% above where they land, and the methods that capitalise current earnings with no growth leave it about 94% above. Read plainly, everything except a durable-compounding assumption says the shares are dear, and the durable-compounding assumption is the one the volume trend is currently arguing with.

Finally there is a date on the calendar. The credit facilities from the separation, a term loan and a revolver totalling a billion dollars of capacity, "will mature on September 30, 2027". Net debt sits at about 2.6 times operating profit, which is comfortable today. Refinancing is a routine exercise in a calm market and a considerably less routine one otherwise, and the company will be doing it while it also funds acquisitions to keep the revenue line moving.

Valuation

What a buyer is paying for here is the shape of the revenue rather than its size. Roughly 86% of sales are replacement filters going into engines already in the field, which produces a stream of income that tracks the installed base and the maintenance calendar rather than the order book for new trucks. That is the durability the price is capitalising, and it is worth naming before any multiple appears.

The multiple is about 17 times company-wide operating income. Inverted, that embeds operating profit compounding at roughly 15.9% a year across a five-year stretch, settling afterwards into a long-run pace of 4%.

Profitability is not the thing being asked to change. The trailing operating margin is 17.0%, and the price does not require it to go anywhere in particular. What it requires is a rate of expansion running well ahead of what an aftermarket parts business normally produces from its own volume.

Only one family of valuation method reaches the price, and it is the forward-growth family. The peer-multiple lens leaves the price about 32% above where it lands. The methods that capitalise today's earnings with no growth assumption leave it about 94% above. That pattern is not a contradiction; it is the definition of a durability premium. Static frames value what the business earns now, and this price is a claim about how long it keeps earning it.

The model that does reach the price shows exactly what has to be believed. The perpetual-growth cash-flow build starts from the free cash flow the company generates today, grows it at 10% a year for six years, then applies a 4% long-run rate, discounted at 7.7%. That is not an aggressive construction by the standards of growth models, and it lands about where the shares trade. Nudge the growth input down and it stops landing there, which is the honest statement of how much room the price leaves.

The comparison that sharpens it is with the peers rather than with the sector. Atmus earns a 17.0% trailing operating margin. DCI, the closest and much larger listed filtration business, earns 15.1% on $3.81 billion of revenue. DORM earns 12.9%, MOD 10.8%, ALV 9.7%, PHIN 7.3%. Atmus is already at the top of that group on profitability, which cuts both ways: it is evidence the moat is real, and it means margin expansion is a smaller lever from here than it would be for a company starting lower.

Rarity gives the growth assumption a reference point that is neither dismissive nor comforting. Of companies that have grown at a comparable pace, roughly 43% sustained it across such a period. Better than a coin flip, and a long way from a given.

The read is also sensitive to the rate used to discount it. The calculation runs at a 9.9% cost of capital, and each additional percentage point of that rate moves the implied operating-profit growth by roughly 6.5 points. For a leveraged spin-off whose credit facilities mature in September 2027, that sensitivity is not academic.

On the balance sheet, net debt runs at about 2.6 times operating profit with interest covered 7.7 times over, the company is not consuming cash, and the share count has been roughly flat over the years since separation. That is enough to carry the business through a soft freight cycle. It is not enough to make the growth assumption optional, which is where the whole question sits.

Catalysts

The first quarter of 2026 was the sort of print that reads well until you decompose it. Net sales reached $477.5 million, up 14.6% from $417 million a year earlier, and GAAP net income was $48.4 million. The increase came mainly from the Koch Filter Corporation acquisition, which closed on January 7, 2026, together with favourable currency and price, while underlying volumes declined.

Guidance is where the market registered its reservation. The company reaffirmed full-year 2026 net sales of $1.95 billion to $2.02 billion and left its earnings outlook unchanged, with the midpoint of that range sitting slightly below where analysts had been. Shares fell on the day despite the quarterly beat, which is a fair summary of the tension in this name: the quarter is fine and the trajectory is the argument.

Two things are worth watching from here. The first is whether the Koch Filter integration lifts the industrial and commercial side of the mix enough to reduce the dependence on heavy-duty truck cycles, since that is the strategic case for buying it. The second is the September 2027 maturity on the separation-era term loan and revolver, which will need to be addressed well before the date itself and will tell you what the credit market makes of a filtration business with three customers and one former parent.

Peer Cohorts (Per Segment, With Filing Citations)

Filtration Products (reported)

• DCI (DONALDSON COMPANY, INC.)
• FY2025 10-K: …and OEM dealer networks. The Industrial Solutions segment is organized based on product type and consists of Industrial Air Filtration, Industrial Gases, Industrial Hydraulics, Power Generation and Aerospace and Defense products. These products are further organized by the Industrial Filtration Solutions and…
• FY2025 10-K: …Technology and features are continually added, such as the iCue™ Connected Filtration Technology, which proactively monitors a facility's dust collection equipment to reduce unplanned downtime, supporting efficient operation and maintenance costs, and better connect Donaldson with its end market customers, enabling…
• PHIN (PHINIA INC.)
• FY2025 10-K: …costs that we incur could have a material adverse effect on our business, financial condition and results of operations. As previously reported, German authorities announced a diesel defeat device investigation in 2022, which we believe is focused on engines sold by two of our light vehicle OEM customers prior to…
• FY2025 10-K: …Methodology Key Assumptions Customer relationships $ 18 12 years Multi-period excess earnings Discount rate, customer attrition rate Patented and unpatented technology 9 6 years Relief-from-royalty Royalty rate, discount rate, obsolescence factor The purchase price, net of cash acquired, was allocated based on the…
• GTX (Garrett Motion Inc.)
• FY2025 10-K: Garrett over time and require significant and sustained research, development and engineering ("RD&E") investments. They bring significant benefits in terms of energy efficiency (thereby reducing total cost of ownership), lower weight and compact packaging that are highly valued by our customers. Our Industry Overview…
• FY2025 10-K: …products We provide a comprehensive range of electric air compressors to manufacturers of fuel cell systems. Our system consists of efficient, powerful, and lightweight air compressors using leading automotive technologies to boost fuel cell vehicles. Air supply is critical for performance, durability and hydrogen…
• MOD (MODINE MANUFACTURING CO)
• FY2025 10-K: …Technologies segment designs and manufactures products and solutions using air-cooled and liquid-cooled technology for vehicular, stationary power, and industrial applications. Air-cooled products consist primarily of powertrain cooling products, such as radiators, condensers, engine cooling modules, charge air…
• FY2025 10-K: …cold rooms, precision and industrial cooling, hospitality, hotels, and restaurants. In fiscal 2025, the commercial and industrial refrigeration markets experienced modest growth. We expect moderate growth in the global refrigeration markets in fiscal 2026, driven by improving standards of living in emerging…
• ALV (AUTOLIV, INC.)
• FY2025 10-K: …increased competition; volatility or increases in raw material, fuel, and energy costs; changes in consumer and customer preferences for end products; loss of customers or sales; legislative or regulatory changes; customer bankruptcies, consolidations or restructuring or divestiture of customer brands; unfavorable…
• FY2025 10-K: Pont-de-Buis Inflator and pyrotechnic development Germany Autoliv B.V. & Co. KG Dachau Customer applications and platform development, airbags with full-scale test laboratory India Autoliv India Private Ltd. Bangalore Airbags and seatbelts with sled testing Japan Autoliv Japan Ltd. Tsukuba Airbags and seatbelts…
• VC (VISTEON CORPORATION)
• FY2025 10-K: …are intended to maintain leadership positions in core products and provide the Company with a competitive edge as it seeks additional business with new and existing customers. The Company also works with technology development partners, including customers, to develop technological capabilities and new products and…
• FY2025 10-K: …the Company's core business: Electronics. The Electronics segment provides products and services to customers, including digital instrument clusters, information displays, infotainment, cockpit domain controllers, CognitoAI TM , battery management systems, high voltage power electronics, and engineering services. As…
• GNTX (GENTEX CORPORATION)
• FY2025 10-K: …or perform goodwill impairment testing. Automotive Products: Automotive products represent the Company's largest business segment, consisting of digital vision, connected car, and other automotive products and electronics which are developed and manufactured by the Company. Products include: interior and exterior…
• FY2025 10-K: …The Company produces rearview mirrors and electronics globally for automotive passenger cars, light trucks, pickup trucks, sport utility vehicles, and vans for original equipment manufacturers ("OEMs"), automotive suppliers, and various aftermarket and accessory customers. Automotive rearview mirrors and electronics…
• DORM (Dorman Products, Inc.)
• FY2025 10-K: …powersports products built for the cool factor and designed with an edge. Gboost - Clutching products for specialty vehicles. GDP - Premium quality transmission, portals, differentials and more for UTVs and ATVs. We offer bumper-to-bumper aftermarket solutions covering everything from engine, undercar, steering and…
• FY2025 10-K: …our products, includes distinct parts of acquired companies, and reflects distinct parts that have been discontinued at the end of their lifecycle. Our products are sold under our various brand names, under our customers' private-label brands, or in bulk. We are one of the leading aftermarket suppliers of parts that…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.