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Donaldson Company
(NYSE:DCI)
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Rating:71Outperform
Price Target:
$104.00
▲(11.60% Upside)
Action:Upgraded
Date:06/02/26
The score is driven primarily by strong financial quality (solid margins, improving leverage, and healthy free cash flow) and supportive guidance/positive earnings-call sentiment. These strengths are tempered by weak technicals (below key moving averages with negative MACD) and a relatively rich P/E with a modest dividend yield; the new credit facility is a smaller positive for flexibility.
Positive Factors
Strong free cash flow generation
Consistent, high free cash flow and strong conversion provide durable capital for capex, dividends, deleveraging and M&A. A ~$412M TTM run-rate and ~84% conversion versus net income materially enhances financial flexibility and resilience across cycles.
Negative Factors
Slowing top-line growth
A persistent deceleration to low-single-digit organic growth constrains operating leverage and the ability to expand margins. Slower topline reduces headroom for reinvestment and shareholder returns and increases reliance on pricing, acquisitions or share gains to sustain EPS growth.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong free cash flow generation
Consistent, high free cash flow and strong conversion provide durable capital for capex, dividends, deleveraging and M&A. A ~$412M TTM run-rate and ~84% conversion versus net income materially enhances financial flexibility and resilience across cycles.
Read all positive factors
Donaldson Company (DCI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.92B
Dividend Yield1.29%
Average Volume (3M)766.43K
Price to Earnings (P/E)24.9
Beta (1Y)0.73
Revenue Growth4.44%
EPS Growth25.08%
CountryUS
Employees15,000
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)3.78
Shares Outstanding115,911,060
10 Day Avg. Volume715,433
30 Day Avg. Volume766,430
Financial Highlights & Ratios
PEG Ratio-2.35
Price to Book (P/B)5.88
Price to Sales (P/S)2.31
P/FCF Ratio25.13
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$91.00Price Target Upside-2.35% Downside
Rating ConsensusHold
Number of Analyst Covering3
EPS Forecast (FY)4.36
Revenue Forecast (FY)$4.14B
Donaldson Company Business Overview & Revenue Model
Company Description
Donaldson Company, Inc. (DCI) is a filtration technology company that designs and manufactures filtration systems and replacement filters used to remove contaminants from air and liquids. The company serves a mix of industrial and mobile/off-road ...
How the Company Makes Money
Donaldson makes money primarily by selling filtration products and related systems through two broad types of revenue: (1) original equipment (first-fit) sales and (2) aftermarket/replacement (consumables) sales. Original equipment revenue comes f...
Donaldson Company Earnings Call Summary
Earnings Call Date:Jun 02, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Sep 02, 2026
Earnings Call Sentiment Positive
The call reflected a largely positive tone: record quarterly sales, a company-high operating margin and EPS, strong performance in mobile solutions and life sciences, successful completion of the Facet acquisition, and clear runway for footprint-driven cost savings. These positives are tempered by temporary but meaningful industrial gross margin headwinds from production shifts and footprint costs, aerospace & defense supply-chain/timing issues, and near-term acquisition-related interest expense. Management communicated confidence in operational recovery by mid fiscal 2027 and reiterated disciplined capital allocation and backlog-driven demand, so the highlights materially outweigh the lowlights.Positive Updates
Record quarterly performance
Total sales increased 6% year-over-year to a record quarter (approximately $995 million reported in the quarter); adjusted EPS was $1.06, up 7% versus FY25; adjusted operating margin was a record 16.6%, up 30 basis points year-over-year and 260 basis points sequentially from Q2.
Negative Updates
Industrial segment gross margin and pretax margin pressure
Industrial solutions sales were $282 million, down 1% year-over-year. Industrial pretax margin declined to 13.4% versus 18.1% prior year (down ~470 basis points) driven by gross margin headwinds from short-term operating inefficiencies, production shifts to Mexico for large turbine systems (~80 basis points impact), and footprint optimization costs.
Read all updates
Q3-2026 Updates
Positive
Negative
Record quarterly performance
Total sales increased 6% year-over-year to a record quarter (approximately $995 million reported in the quarter); adjusted EPS was $1.06, up 7% versus FY25; adjusted operating margin was a record 16.6%, up 30 basis points year-over-year and 260 basis points sequentially from Q2.
Read all positive updates
Company Guidance
Management updated fiscal 2026 guidance: consolidated organic sales +3.0% to +5.0% (pricing and FX each contributing a little >1%), with Mobile Solutions +3.5%–+5.5%, Industrial Solutions flat to +2% (IFS low‑single‑digit growth, Aerospace & Defense down mid‑single‑digits), and Life Sciences +9%–+11% (raised from prior 5%–9%); organic operating margin 15.8%–16.2% (implying full‑year expansion of ~10–50 bps) and full‑year pretax margin mid‑to‑high single digits, adjusted EPS excluding Facet $3.94–$4.01 (midpoint ≈ +8% YoY), capex $60M–$75M, cash conversion 85%–95%, and pro forma net debt/EBITDA ≈1.8x including Facet; Facet will add ~$25M–$30M of Q4 sales (~70–80 bps to full‑year growth), ~ $9M of interest and ~ $0.03 EPS dilution in Q4 (immaterial operating‑margin impact this year), with ~ $4–5M of expected procurement synergies and GAAP accretion by year two.Donaldson Company Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
78
Positive
Cash Flow
80
Positive
| Breakdown | TTM | Jul 2025 | Jul 2024 | Jul 2023 | Jul 2022 | Jul 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.81B | 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 | 694.40M | 615.90M | 655.10M | 580.20M | 547.60M | 489.30M |
| Net Income | 438.80M | 367.00M | 414.00M | 358.80M | 332.80M | 286.90M |
Balance Sheet | ||||||
| Total Assets | 3.09B | 2.98B | 2.91B | 2.77B | 2.60B | 2.40B |
| Cash, Cash Equivalents and Short-Term Investments | 204.10M | 180.40M | 232.70M | 187.10M | 193.30M | 222.80M |
| Total Debt | 608.30M | 668.30M | 598.20M | 655.70M | 692.80M | 527.60M |
| Total Liabilities | 1.39B | 1.52B | 1.43B | 1.45B | 1.47B | 1.26B |
| Stockholders Equity | 1.70B | 1.45B | 1.49B | 1.32B | 1.13B | 1.14B |
Cash Flow | ||||||
| Free Cash Flow | 388.80M | 339.90M | 406.90M | 426.40M | 167.70M | 343.60M |
| Operating Cash Flow | 461.60M | 418.80M | 492.50M | 544.50M | 252.80M | 401.90M |
| Investing Cash Flow | -62.80M | -150.40M | -86.90M | -327.30M | -154.00M | -58.30M |
| Financing Cash Flow | -378.60M | -321.70M | -355.90M | -222.20M | -114.20M | -363.30M |
Donaldson Company Technical Analysis
Positive
93.19
Price Trends
88.11
Positive
86.93
Positive
89.93
Positive
Market Momentum
2.14
Negative
71.17
Negative
86.23
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DCI, the sentiment is Positive. The current price of 93.19 is above the 20-day moving average (MA) of 91.60, above the 50-day MA of 88.11, and above the 200-day MA of 89.93, indicating a bullish trend. The MACD of 2.14 indicates Negative momentum. The RSI at 71.17 is Negative, neither overbought nor oversold. The STOCH value of 86.23 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DCI.
Donaldson Company Risk Analysis
Donaldson Company disclosed 19 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $11.55B | 31.61 | 18.38% | 0.63% | 14.22% | 25.22% | |
71 Outperform | $10.92B | 24.93 | 28.13% | 1.31% | 4.44% | 25.08% | |
69 Neutral | $8.29B | 16.75 | 25.94% | 2.34% | 0.39% | -0.01% | |
69 Neutral | $11.00B | 38.06 | 12.67% | ― | 20.63% | 27.00% | |
68 Neutral | $13.66B | 47.51 | 4.23% | 0.66% | 1.54% | 22.59% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
58 Neutral | $11.60B | 44.70 | 9.54% | ― | 0.61% | -27.77% |
* Industrials Sector Average
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Donaldson Company Corporate Events
Business Operations and StrategyExecutive/Board Changes
Donaldson Company Announces Resignation of Longtime Board Director
Neutral
Jul 24, 2026
Donaldson Company, Inc., a leading industrial filtration manufacturer serving engine, industrial and environmental markets, continues to rely on a diversified portfolio of filtration products and technologies to support customers across multiple s...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.