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Donaldson Company (DCI)
NYSE:DCI
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Donaldson Company
(NYSE:DCI)74Outperform
Positive Factors
Life Sciences Revenue
Life sciences revenue increased 9% year-over-year.
Negative Factors
Earnings and Revenue
Donaldson reported second-quarter revenue and earnings below consensus estimates.
Stock Rating
The stock rating is reiterated as Underweight, reflecting execution risk and macro uncertainty.
Donaldson Company (DCI) vs. S&P 500 (SPY)
Market Cap
$8.34B
Dividend Yield1.55%
Average Volume (3M)586.77K
Price to Earnings (P/E)20.4
Beta (1Y)0.78
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees14,000
SectorIndustrials
Sector Strength66
IndustryIndustrial Goods
Share Statistics
EPS (TTM)3.42
Shares Outstanding119,517,820
10 Day Avg. Volume776,135
30 Day Avg. Volume586,774
Financial Highlights & Ratios
PEG Ratio1.71
Price to Book (P/B)N/A
Price to Sales (P/S)2.29
Price to Cash Flow (P/CF)23.10
P/FCF Ratio23.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$74.00Price Target Upside5.64% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Donaldson Company Business Overview & Revenue Model
Company DescriptionDonaldson Company, Inc. (DCI) is a global leader in the filtration industry, providing innovative filtration solutions to a diverse range of markets including industrial, aerospace, and automotive sectors. The company's core products and services focus on air and liquid filtration systems, offering a comprehensive portfolio that is designed to enhance equipment performance and protect critical processes.
How the Company Makes MoneyDonaldson Company generates revenue through the sale of filtration systems and replacement parts. Its key revenue streams include the Engine Products segment, which provides filtration solutions for on-road and off-road vehicles, and the Industrial Products segment, which offers filtration solutions for industrial applications, including dust collection and compressed air purification. The company also benefits from aftermarket sales, providing replacement filters and parts that ensure continued performance of their installed solutions. Furthermore, strategic partnerships with OEMs and a global distribution network enhance its market reach and contribute significantly to its earnings.
Donaldson Company Financial Statement Overview
Summary
Donaldson Company exhibits strong financial health, with consistent revenue and profit growth, strong margins, and efficient capital management. Despite moderate leverage, the company's effective equity utilization and cash generation capabilities position it well for future growth opportunities.Income Statement
Donaldson Company demonstrates strong income statement metrics, with a consistent increase in total revenue, gross profit, and net income over the years. The gross profit margin for TTM (Trailing-Twelve-Months) is approximately 35.4%, and the net profit margin is about 11.5%, indicating solid profitability. Revenue growth has been steady, with a notable increase from previous periods. EBIT and EBITDA margins are also healthy at 15.0% and 16.6%, respectively, reflecting operational efficiency.85
Very Positive
Balance Sheet
The balance sheet of Donaldson Company is robust, with a debt-to-equity ratio of 0.36 for the TTM, indicating moderate leverage. The return on equity (ROE) is strong at approximately 27.1%, showcasing effective equity utilization. The equity ratio stands at 52.2%, suggesting a well-capitalized company with a balanced asset structure. However, a slight increase in total debt over time is a point to monitor.80
Positive
Cash Flow
Donaldson Company maintains a healthy cash flow position, with a stable operating cash flow and a positive free cash flow. The free cash flow growth rate shows slight fluctuations but remains positive. The operating cash flow to net income ratio is approximately 1.03, indicating efficient cash conversion. The free cash flow to net income ratio is around 0.87, reflecting strong cash generation relative to profits.78
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.63B | 3.59B | 3.43B | 3.31B | 2.85B | 2.58B | Gross Profit |
| 1.29B | 1.27B | 1.16B | 1.07B | 971.70M | 871.60M | EBIT |
| 546.10M | 544.10M | 480.20M | 443.50M | 384.70M | 340.10M | EBITDA |
| 653.00M | 655.10M | 580.20M | 547.60M | 489.30M | 440.20M | Net Income Common Stockholders |
| 418.10M | 414.00M | 358.80M | 332.80M | 286.90M | 257.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 189.10M | 232.70M | 187.10M | 193.30M | 222.80M | 236.60M | Total Assets |
| 2.96B | 2.91B | 2.77B | 2.60B | 2.40B | 2.24B | Total Debt |
| 577.40M | 536.70M | 655.70M | 648.00M | 527.60M | 700.70M | Net Debt |
| 388.30M | 304.00M | 468.60M | 454.70M | 304.80M | 464.10M | Total Liabilities |
| 1.42B | 1.43B | 1.45B | 1.47B | 1.26B | 1.25B | Stockholders Equity |
| 1.54B | 1.49B | 1.32B | 1.13B | 1.14B | 992.90M |
| Cash Flow | Free Cash Flow | ||||
| 345.80M | 406.90M | 426.40M | 167.70M | 343.60M | 264.60M | Operating Cash Flow |
| 430.80M | 492.50M | 544.50M | 252.80M | 401.90M | 387.00M | Investing Cash Flow |
| -157.50M | -86.90M | -327.30M | -154.00M | -58.30M | -128.90M | Financing Cash Flow |
| -272.70M | -355.90M | -222.20M | -114.20M | -363.30M | -199.50M |
Donaldson Company Technical Analysis
Neutral
70.05
Price Trends
69.18
Positive
71.55
Negative
71.69
Negative
Market Momentum
-0.14
Negative
53.85
Neutral
88.87
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DCI, the sentiment is Neutral. The current price of 70.05 is above the 20-day moving average (MA) of 69.20, above the 50-day MA of 69.18, and below the 200-day MA of 71.69, indicating a neutral trend. The MACD of -0.14 indicates Negative momentum. The RSI at 53.85 is Neutral, neither overbought nor oversold. The STOCH value of 88.87 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DCI.
Donaldson Company Risk Analysis
Donaldson Company disclosed 17 risk factors in its most recent earnings report. Donaldson Company reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Donaldson Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $80.56B | 23.43 | 110.24% | 2.11% | -1.30% | 20.26% | |
74 Outperform | $8.34B | 20.39 | 28.63% | 1.55% | ― | ― | |
74 Outperform | $31.75B | 35.74 | 8.55% | 1.13% | 16.23% | 34.42% | |
73 Outperform | $14.56B | 23.61 | 18.45% | 1.06% | -0.53% | 0.13% | |
65 Neutral | $146.68B | 40.10 | 7.57% | 0.51% | -13.50% | -17.25% | |
63 Neutral | $9.96B | 19.13 | 28.63% | 1.90% | -0.90% | -1.69% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
DCI
Donaldson Company
70.05
-0.57
-0.81%
DHR
Danaher
205.23
-46.48
-18.47%
ITW
Illinois Tool Works
267.67
11.79
4.61%
PNR
Pentair
85.19
4.79
5.96%
AOS
A. O. Smith Corporation
69.61
-14.25
-16.99%
XYL
Xylem
128.25
3.47
2.78%
Donaldson Company Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: 1.16% | Next Earnings Date: Jun 10, 2025
Earnings Call Sentiment Neutral
Donaldson demonstrated resilience and strategic focus, achieving growth in key areas and improving profitability despite challenging market conditions and currency headwinds. However, declines in industrial filtration and agricultural markets, alongside bioprocessing challenges, posed significant hurdles.Highlights
Resilience in Challenging Market Conditions
Donaldson achieved higher sales in key higher margin businesses despite weak end market conditions. Total sales increased by 1% in constant currency, and adjusted EPS rose by 3% year-over-year to $0.83.
Strong Performance in Aerospace and Defense
The aerospace and defense segment exceeded expectations with a record demand for new equipment in commercial aerospace and strong defense orders, contributing to a 19% sales growth.
Mobile Solutions Aftermarket Success
Aftermarket sales in Mobile Solutions grew by 4% year-over-year, driven by low double-digit growth in the OE channel, showcasing strong demand and market share gains.
Continued Investment for Future Growth
Donaldson maintained robust on-time delivery rates and invested in capacity expansion, new products and technologies, while leveraging a strong balance sheet to support strategic investments.
Life Sciences Profitability Improvement
The life sciences segment saw an improvement in pre-tax profit margin, driven by cost optimization efforts and leverage on higher sales.
Lowlights
Decline in Industrial Filtration Solutions
Industrial sales decreased by 4% due to an 8% decline in Industrial Filtration Solutions, primarily driven by slower investments in CapEx-based businesses and power generation project timing.
Weakness in Agriculture and On-Road Sales
Mobile Solutions saw a 13% decline in off-road sales due to ongoing weakness in the agriculture market, and a 24% decline in on-road sales due to an exit from non-strategic product sales and decreased truck production.
Challenges in Bioprocessing
Despite a solid therapy pipeline, early-stage capital spending in bioprocessing remains constrained, impacting growth in this segment.
Currency Translation Impact
Sales were negatively impacted by a 170 basis point currency translation headwind, affecting overall performance.
Company Guidance
During the Donaldson Company's second quarter fiscal year 2025 earnings call, several key financial metrics and guidance updates were provided. Total sales for the quarter were $870 million, reflecting a 1% decrease year-over-year due to a 170 basis point negative impact from currency translation; however, sales increased by 1% in constant currency with a pricing benefit of approximately 1%. Adjusted earnings per share (EPS) for the quarter was $0.83, up 3% compared to the previous year. Operating margin expanded by 40 basis points to 15.2% as a result of disciplined expense management. For the full fiscal year 2025, the company revised its sales forecast to be flat to up 4%, influenced by foreign exchange headwinds and weaker-than-expected end markets. Mobile solutions sales are expected to range from a 1% decrease to a 3% increase, while industrial solutions sales are projected to grow between 1% and 5%, and life sciences sales are now anticipated to increase in the high single-digit range. The company maintained its adjusted EPS guidance between $3.60 and $3.68 per share, representing a 6% year-over-year increase. Capital expenditures for the year are expected to be between $85 million and $100 million, primarily focused on growth initiatives.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.