Donaldson Company (DCI) AI Stock Analysis

• Market Cap: $12.33B
• Dividend Yield: 1.28%
• Average Volume (3M): 687.83K
• Price to Earnings (P/E): 33.3
• Beta (1Y): 0.75
• Revenue Growth: 2.37%
• EPS Growth: -6.93%
• Country: US
• Employees: 14,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 0.83
• Shares Outstanding: 115,336,685
• 10 Day Avg. Volume: 651,903
• 30 Day Avg. Volume: 687,825
• PEG Ratio: -2.35
• Price to Book (P/B): 5.88
• Price to Sales (P/S): 2.31
• P/FCF Ratio: 25.13
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: 3.37
• Enterprise Value/Gross Profit: 9.69
• Enterprise Value/Ebitda: 19.83
• 1Y Price Target: $105.50
• Price Target Upside: 1.03% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 4.05
• Revenue Forecast (FY): $3.83B

• Rating: 74 Outperform
• Price Target: $117.00 ▲(12.05% Upside)
• Action: Reiterated Date: 02/26/26
• Date: Action: Reiterated 02/26/26

The score is driven primarily by strong financial performance (healthy growth, profitability, and cash generation) and supportive full-year guidance pointing to record margin and EPS at the midpoint. Technicals are moderately positive but show near-term consolidation, while valuation (high P/E with a modest yield) is the main constraint on the overall score.

Positive Factors

Strong free cash flow generation

Sustained FCF growth and a high FCF-to-net-income ratio indicate durable cash generation capacity. With management guiding ~85%–95% cash conversion and modest capex ($60–$75M), the company can fund operations, dividends, M&A paydown and reinvestment without relying on volatile external financing.

Accretive Facet acquisition expands recurring revenue

Acquiring Facet meaningfully broadens high-margin, recurring aftermarket exposure in fuel/fluid filtration for aerospace, defense and power generation. The transaction increases recurring revenue mix and margins, improving portfolio resilience and long-term earnings stability if integration and regulatory approval proceed as planned.

Diverse end-market exposure and high ROE

Broad product set across industrial, engine and life‑sciences end markets reduces single‑market cyclicality. Recent Life Sciences margin recovery and double‑digit growth, combined with a high ROE, point to efficient capital deployment and durable demand in regulated and aftermarket segments supporting long‑term profitability.

Negative Factors

Gross and operating margin pressure

Material margin erosion from volume deleverage, startup and footprint optimization costs signals structural execution gaps. Persistent inefficiencies could compress margins over multiple quarters, making achieving the company’s record operating margin guidance harder and reducing cash available for strategic initiatives.

Higher leverage and acquisition multiple

An $820M all‑cash deal funded partly with new debt raises pro forma leverage and liquidity risk. The acquisition multiple (high relative to EBITDA) and the need to rapidly pay down debt increase sensitivity to integration timing and cash conversion, reducing financial flexibility during execution.

Softness in specific end markets

Weakness in A&D, on‑road OE and select IFS subcategories (dust collection, hydraulics) creates uneven demand and lowers near‑term industrial segment growth. Revised, lower Industrial Solutions guidance and large margin swings in those businesses raise risk that recovery will be gradual and uneven across segments.

Donaldson Company Business Overview & Revenue Model

Company Description

Donaldson Company, Inc. manufactures and sells filtration systems and replacement parts worldwide. The company operates through two segments, Engine Products and Industrial Products. Its Engine Products segment provides replacement filters for air and liquid filtration applications; 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, OEM dealer networks, private label accounts, and large fleets. The company's Industrial Products segment offers dust, fume, and mist collectors; compressed air purification systems; gas and liquid filtration for food, beverage, and industrial processes; air filtration systems for gas turbines; polytetrafluoroethylene membrane-based products; and specialized air and gas filtration systems for applications, including hard disk drives, semi-conductor manufacturing and sensors, indicators, and monitoring systems. This segment sells its products to various dealers, distributors, OEMs of gas-fired turbines, and OEMs and end-users requiring air filtration solutions and replacement filters. Donaldson Company, Inc. was founded in 1915 and is headquartered in Bloomington, Minnesota.

How the Company Makes Money

Donaldson Company generates revenue primarily through the sale of filtration products and systems. Its revenue model is based on two main segments: Engine Products and Industrial Products. The Engine Products segment focuses on filtration solutions for internal combustion engines, including those used in heavy-duty vehicles and equipment, which contributes significantly to overall sales. The Industrial Products segment offers a variety of filtration solutions for industrial processes, including dust collection and process filtration systems. Key revenue streams include direct sales, replacement parts, and aftermarket services. DCI also engages in strategic partnerships with original equipment manufacturers (OEMs) and distributors, expanding its market reach and enhancing its product offerings. Additionally, the company benefits from a recurring revenue model through aftermarket sales, as customers often return for replacement filters and maintenance services.

Donaldson Company Financial Statement Overview

Summary

Strong overall fundamentals supported by solid revenue growth (TTM +9.56%) and healthy operating profitability (gross margin ~34.85%). Cash generation is robust with free cash flow growth (TTM +18.62%) and solid FCF-to-net-income (0.81). Balance sheet leverage is moderate (debt-to-equity 0.46) with strong ROE (24.45%), though net margin pressure and rising debt warrant monitoring.

Income Statement

Donaldson Company demonstrates strong revenue growth with a TTM increase of 9.56%, indicating robust demand for its products. The gross profit margin remains stable at approximately 34.85%, reflecting efficient cost management. However, the net profit margin has slightly decreased over time, currently at 9.94%, suggesting some pressure on profitability. Overall, the company maintains healthy EBIT and EBITDA margins, showcasing operational efficiency.

Balance Sheet

The company maintains a moderate debt-to-equity ratio of 0.46, indicating a balanced approach to leveraging. Return on equity is strong at 24.45%, reflecting effective use of shareholder funds. The equity ratio stands at 50.12%, suggesting a solid capital structure. However, the slight increase in total debt over the periods warrants monitoring.

Cash Flow

Donaldson Company shows a positive trend in free cash flow growth at 18.62% TTM, indicating improved cash generation capabilities. The operating cash flow to net income ratio is stable at 0.55, suggesting efficient cash conversion. The free cash flow to net income ratio of 0.81 further supports the company's ability to generate cash relative to its earnings.

Breakdown	TTM	Jul 2025	Jul 2024	Jul 2023	Jul 2022	Jul 2021
Income Statement
Total Revenue	3.73B	3.69B	3.59B	3.43B	3.31B	2.85B
Gross Profit	1.30B	1.29B	1.27B	1.16B	1.07B	971.70M
EBITDA	633.30M	615.90M	655.10M	580.20M	547.60M	489.30M
Net Income	381.90M	367.00M	414.00M	358.80M	332.80M	286.90M
Balance Sheet
Total Assets	3.03B	2.98B	2.91B	2.77B	2.60B	2.40B
Cash, Cash Equivalents and Short-Term Investments	210.70M	180.40M	232.70M	187.10M	193.30M	222.80M
Total Debt	674.00M	730.20M	598.20M	655.70M	692.80M	527.60M
Total Liabilities	1.51B	1.52B	1.43B	1.45B	1.47B	1.26B
Stockholders Equity	1.52B	1.45B	1.49B	1.32B	1.13B	1.14B
Cash Flow
Free Cash Flow	403.20M	339.90M	406.90M	426.40M	167.70M	343.60M
Operating Cash Flow	471.30M	418.80M	492.50M	544.50M	252.80M	401.90M
Investing Cash Flow	-57.80M	-150.40M	-86.90M	-327.30M	-154.00M	-58.30M
Financing Cash Flow	-424.60M	-321.70M	-355.90M	-222.20M	-114.20M	-363.30M

Donaldson Company Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 104.42
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 104.42 is below the 20-day moving average (MA) of 106.54, above the 50-day MA of 99.27, and above the 200-day MA of 82.50, indicating a neutral trend. The MACD of 2.15 indicates Positive momentum. The RSI at 49.68 is Neutral, neither overbought nor oversold. The STOCH value of 12.66 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DCI.

Donaldson Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WTS	80 Outperform	$11.02B	32.51	18.25%	0.70%	4.18%	16.05%
AOS	77 Outperform	$10.68B	20.06	29.20%	2.04%	-1.64%	-2.50%
SPXC	76 Outperform	$12.11B	45.02	13.56%	―	12.60%	24.02%
DCI	74 Outperform	$12.33B	33.35	24.96%	1.28%	2.37%	-6.93%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
RRX	61 Neutral	$14.88B	53.30	4.27%	0.97%	-4.99%	22.16%
GNRC	60 Neutral	$13.80B	88.04	6.22%	―	5.52%	9.03%

Donaldson Company Corporate Events

Donaldson Company Announces $820 Million Facet Acquisition Deal

On January 31, 2026, Donaldson Company entered into a definitive Securities Purchase Agreement to acquire Filtration Group’s Facet Filtration business, which includes U.S. and European entities, in an all-cash transaction valued at approximately $820 million, subject to customary adjustments and regulatory approvals. Announced publicly on February 2, 2026, the deal is expected to add about $108 million in 2025 sales and significantly broaden Donaldson’s fuel and fluid filtration portfolio, especially in mission-critical applications such as aerospace, defense and power generation, while strengthening its aftermarket position with a large installed base and roughly 70% of Facet’s revenues coming from recurring, regulated replacement consumables; the company expects the acquisition to be immediately margin accretive and earnings-accretive in fiscal 2027, enhancing Donaldson’s financial profile and competitive positioning in high-performance filtration markets, provided the transaction closes as anticipated.

The most recent analyst rating on (DCI) stock is a Buy with a $110.00 price target. To see the full list of analyst forecasts on Donaldson Company stock, see the DCI Stock Forecast page.