Donaldson Company (DCI) AI Stock Analysis

• Market Cap: $12.33B
• Dividend Yield: 1.28%
• Average Volume (3M): 701.33K
• 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: 656,605
• 30 Day Avg. Volume: 701,332
• 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: 0.91
• Enterprise Value/Revenue: 2.99
• Enterprise Value/Gross Profit: 8.71
• Enterprise Value/Ebitda: 18.85
• 1Y Price Target: $104.00
• Price Target Upside: 12.83% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 4.05
• Revenue Forecast (FY): $3.83B

• Rating: 67 Neutral
• Price Target: $100.00 ▲(8.50% Upside)
• Action: Downgraded Date: 02/27/26
• Date: Action: Downgraded 02/27/26

The score is driven primarily by solid underlying financial performance and constructive forward guidance (record margin/EPS outlook), partially offset by weaker technical positioning and a relatively expensive valuation. Near-term margin pressure and execution risks in Industrial Solutions also temper the outlook.

Positive Factors

Recurring Aftermarket Revenue

A high share of recurring, regulated replacement revenue (Facet ~70%) strengthens revenue durability and predictability. Aftermarket consumables reduce cyclicality, sustain margins over time, and create installed-base-driven cash flow that supports reinvestment and returns irrespective of new-equipment cycles.

Strong Cash & Capital Policy

Healthy cash generation and disciplined capital allocation (consistent dividends, high cash conversion, low net leverage pre-acquisition) provide financial flexibility. This funds capex, M&A, and returns while allowing rapid deleveraging post-acquisition, underpinning long-term financial resilience.

Life Sciences Growth & Margin Recovery

Outperformance and a large margin swing in Life Sciences signals successful entry into higher-growth, higher-margin end markets. Structural diversification into food, beverage and disk drive filtration reduces exposure to industrial cyclicality and can enhance consolidated margins sustainably.

Negative Factors

Gross Margin Pressure

Material margin erosion (150bps YoY) from volume deleverage, plant startups and footprint optimization implies structural cost and mix challenges. If these issues persist or learning curves extend, operating leverage may remain impaired and constrain sustained margin expansion.

Industrial Solutions Execution

A large margin decline in a core segment reflects operational execution risks and complexity. Persistent inefficiencies could require incremental investment or restructuring, divert management focus and capital, and limit the segment's contribution to company-wide profitability over the medium term.

Cash Flow Variability & Pro Forma Leverage

A recent ~13% FCF decline and working-capital swings reduce near-term internal funding capacity. Combined with acquisition-driven pro forma leverage (~1.7x), this constrains financial flexibility, may delay buybacks or aggressive expansion, and raises sensitivity to cyclical downturns.

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 profitability and steady multi-year revenue growth, with manageable leverage and high ROE. However, TTM operating margin has stepped down and free cash flow has recently declined, creating some earnings-quality and cyclicality risk.

Income Statement

DCI shows solid profitability for an industrial name, with TTM (Trailing-Twelve-Months) gross margin around 34% and net margin near 10%. Revenue has grown steadily over the multi-year period (from ~$2.85B in 2021 to ~$3.75B TTM), supporting scale benefits. The main soft spot is recent margin pressure versus prior years (EBIT margin down from mid-teens in 2023–2024 to ~10.8% TTM), suggesting higher costs, mix shift, or reinvestment weighing on operating leverage.

Balance Sheet

Leverage looks manageable, with debt-to-equity improving to ~0.43 in TTM (Trailing-Twelve-Months) from ~0.50 in FY2025 and ~0.61 in FY2022. Equity has grown over time and returns on equity remain strong (~25%+ in TTM), indicating good capital efficiency. The trade-off is that returns are high partly alongside meaningful debt and a relatively modest equity base versus assets, so the balance sheet is sound but not ultra-conservative for a cyclical industrial backdrop.

Cash Flow

Cash generation is healthy in absolute dollars (TTM operating cash flow ~$414M and free cash flow ~$350M), and free cash flow tracks earnings reasonably well (about 85% of net income in TTM). However, free cash flow has recently declined (TTM down ~13% versus the prior period), and cash conversion is not consistently strong year-to-year, pointing to working-capital swings and/or higher reinvestment needs that can create variability.

Breakdown	TTM	Jul 2025	Jul 2024	Jul 2023	Jul 2022	Jul 2021
Income Statement
Total Revenue	3.75B	3.69B	3.59B	3.43B	3.31B	2.85B
Gross Profit	1.29B	1.29B	1.27B	1.16B	1.07B	971.70M
EBITDA	596.10M	615.90M	655.10M	580.20M	547.60M	489.30M
Net Income	378.50M	367.00M	414.00M	358.80M	332.80M	286.90M
Balance Sheet
Total Assets	3.06B	2.98B	2.91B	2.77B	2.60B	2.40B
Cash, Cash Equivalents and Short-Term Investments	194.40M	180.40M	232.70M	187.10M	193.30M	222.80M
Total Debt	680.80M	730.20M	598.20M	655.70M	692.80M	527.60M
Total Liabilities	1.49B	1.52B	1.43B	1.45B	1.47B	1.26B
Stockholders Equity	1.58B	1.45B	1.49B	1.32B	1.13B	1.14B
Cash Flow
Free Cash Flow	349.70M	339.90M	406.90M	426.40M	167.70M	343.60M
Operating Cash Flow	413.90M	418.80M	492.50M	544.50M	252.80M	401.90M
Investing Cash Flow	-53.70M	-150.40M	-86.90M	-327.30M	-154.00M	-58.30M
Financing Cash Flow	-364.70M	-321.70M	-355.90M	-222.20M	-114.20M	-363.30M

Donaldson Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 92.17
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DCI, the sentiment is Negative. The current price of 92.17 is below the 20-day moving average (MA) of 105.56, below the 50-day MA of 99.28, and above the 200-day MA of 82.74, indicating a neutral trend. The MACD of -0.18 indicates Positive momentum. The RSI at 27.02 is Positive, neither overbought nor oversold. The STOCH value of 21.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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	67 Neutral	$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.