Ask most value investors what lesson they consider most valuable when it comes to picking a stock, and you'll probably hear "margin of safety." That is, getting a stock at a low-enough price so that even if you're a bit off on your analysis, there's enough of a discount to absorb some of that mistake. With investor enthusiasm having pushed up the valuation on the entire filtration sector, I wonder whether Donaldson (NYSE:DCI) has enough of a margin of safety to make it a good buy today.

Results for the fourth quarter don't offer up a compelling story, good or bad. Sales grew about 9% net of currency effects, and reported net income was down slightly from the year-ago period to just more than $25 million. Investors must also consider the fact that a tax charge of $4 million and an increased litigation reserve of $6.4 million shaved away a good-sized chunk of earnings.

Cash flow doesn't tell the complete story, either. Yes, free cash flow was up more than 20% over last year, but it was still down almost 7% from two years ago and 19% from three years ago. What's more, free cash flow yield (free cash flow divided by revenue) is some 40% lower than it was three years back.

Turning to the business at hand, the company saw revenue increase 10% in both the engine and industrial businesses, with sales to Asia generally quite positive. While certain segments such as gas turbine and engine aftermarket/replacement were soft, sales to truck and off-road markets were strong.

Looking at a broad range of filtration companies -- including CLARCOR (NYSE:CLC), Pall (NYSE:PLL), Millipore (NYSE:MIL), and CalgonCarbon (NYSE:CCC) -- Donaldson doesn't stand out as being managed especially well or poorly. Neither does it stick out as being especially cheap or expensive. I'm not wildly enthusiastic about seemingly middle-of-the-road companies unless I see something within that might spark the business. Since I don't see anything that would suggest a good margin of safety for Donaldson yet, I'll be staying on the sidelines this quarter.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).