| Snowflake Score | |
|---|---|
| Valuation | 4/6 |
| Future Growth | 2/6 |
| Past Performance | 6/6 |
| Financial Health | 5/6 |
| Dividends | 5/6 |
DCI Stock Overview
Donaldson Company, Inc. manufactures and sells filtration systems and replacement parts worldwide.
Donaldson Company Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$49.01 |
| 52 Week High | US$63.15 |
| 52 Week Low | US$46.00 |
| Beta | 1.26 |
| 1 Month Change | -3.60% |
| 3 Month Change | 0.91% |
| 1 Year Change | -16.44% |
| 3 Year Change | -3.54% |
| 5 Year Change | 5.76% |
| Change since IPO | 5,246.55% |
Recent News & Updates
Donaldson Company (NYSE:DCI) Has A Pretty Healthy Balance Sheet
David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the...
Donaldson: Pricing Actions To Benefit Revenues And Margins
Summary Donaldson's near-term sales growth should benefit from pricing action as well as volume growth in Aftermarket and Aerospace. Margins should also benefit from pricing actions and a focus on higher-margin projects. Valuation is cheap. Investment Thesis Donaldson Company's (DCI) stock is up ~10% since our last article. The company's sales benefited from the strong end markets and pricing actions in FY22. The pricing actions taken in FY22 are expected to carry over into FY23, which should support the revenue growth of the company. The volumes in Aftermarket and Aerospace & Defense businesses should benefit from the strong demand and recovery in commercial airlines which should more than offset any slowdown in on-road and off-road business. DCI plans to improve its profitability by focusing on higher-margin projects. This along with pricing action and cost control measures should help margins in FY23. Valuations are cheap. DCI Q4 FY22 Earnings Donaldson recently reported mixed fourth-quarter FY22 financial results, with EPS in line with estimates and better-than-expected revenue. The company's revenue in the quarter grew 15% Y/Y to $890 mn (vs. the consensus estimate of $880.24 mn). The adjusted EPS was up 27% Y/Y to $0.84 (vs. the consensus estimate of $0.84). The sales growth was driven by a 12% contribution from pricing and 10% from volumes, partially offset by a 7% negative impact from unfavorable currency translation. The adjusted operating margin in the quarter was up 40 bps Y/Y to 14.9% as operating expense leverage outweighed gross margin pressure. The gross margin was down 150 bps Y/Y to 32.9%. The improvement in adjusted operating margin and lower share count led to a 27% Y/Y growth in adjusted EPS. Revenue Outlook In Q4 FY22, the company saw a modest improvement in the supply chain constraints, including chip shortages. This led to an increase in sales by 18% Y/Y in the Engine Products segment. The sales in Off-road, Aftermarket, and Aerospace & Defense businesses grew in double-digits Y/Y. The Aftermarket business benefited from the growth in Exhaust and Emission business in Europe. The Aerospace & Defense business grew with the strength of replacement parts as commercial aerospace is recovering. However, the sales of the On-road business dropped by a low single-digit due to the weakness in the Asia-Pacific region. The Engine Products business in China was down 6% Y/Y due to the shutdown of plants for two weeks in China, resulting from COVID-19 lockdowns. The company is expanding its independent channels of the Engine Aftermarket business to increase its presence in underrepresented regions such as Mexico and Brazil. The sales in both Off-road and On-road businesses are expected to decline by the low single digits due to the strategic exit from certain low-margin programs. The company is focusing on projects with higher margins to improve its profitability. This should impact sales negatively in the near term but should improve profitability along with increasing sales in the long term. The volume growth across both businesses, i.e., Off-road and On-road are expected to slow in FY23. In the off-road business, the volumes related to the new emission program in Europe are expected to have peaked in FY22. This should result in a slowdown in volumes next year. Even though the supply chain constraints are moderating, the On-road business should remain impacted to some extent in FY23. This should be offset by mid-single-digit growth in the Aftermarket and Aerospace & Defense businesses. The demand in the Aftermarket business remains robust with the high levels of utilization of vehicles. The company's strategy to expand its Aftermarket business in the underrepresented region should also help gain market share. The Aerospace & Defense business sales are expected to be supported by the strengthening commercial aerospace industry, which remains below pre-COVID levels. Even though the business in the APAC region, especially China is still getting impacted by Covid, I believe the situation should improve next year and the company has good long-term plans in China which are expected to drive market share gains and growth. The Industrial segment sales increased 10% Y/Y last quarter driven by growth in industrial dust collection, new equipment, and replacement parts. Sales of industrial filtration solutions grew by 14%, mainly driven by industrial dust collection new equipment and replacement parts. DCI's process filtration sales benefited from new program wins. Sales of Gas Turbine Systems increased by 39% bolstered by the timing of replacement parts sales in EMEA. Sales of special applications were down 17% due to the COVID-19 shutdowns in China impacting disk drive sales partially offset by growth in venting product sales. In the Industrial segment, the sales are expected to be driven by the strong demand for dust collection and Process Filtration products and the contributions from the three acquisitions made in FY22. In the fourth quarter, the company acquired Purilogics to expand its presence in the Life Sciences sector. Purilogics' technology platform, when integrated with DCI's technology, should allow DCI to bring a broad portfolio of purification tools to the market. Looking forward, the pricing actions taken by the company in FY22 are expected to carry over into FY23 and contribute significantly to the revenue, especially in the first half of FY23. The pricing benefit in 2H FY22 was twice that in 1H FY22, which should result in stronger gains earlier in FY23. The company will also be implementing its regular price hike that is normally done each year, but the majority of the pricing benefit will likely be from the price hikes already implemented in the back half of FY22. So, there is good visibility in terms of pricing benefits in FY23. The sales guidance range for FY23 is between 1% and 5%, which includes pricing benefits of ~6% and ~4% headwind from currency translation. The company is positioning itself to withstand the economic downturns by utilizing its global footprint to circumvent supply chain issues, capitalize on replacement parts business, manage costs, and utilize its balance sheet to pursue opportunities in the "Advance and Accelerate" businesses and Life Sciences sector. DCI has been cementing its position as a leader in technology-led filtration by meeting customer demand by working down its backlog and inventory. This bodes well for the company's long-term growth. Margins In the fourth quarter of FY22, the company saw some stabilization in commodity costs and a slight easing of global logistics and labor pressures. However, the gross margin in the quarter remained under pressure as it declined 150 bps Y/Y to 32.9%. While the company is offsetting inflation in commodities and freight through price hikes, other transitionary factors such as inefficiencies, labour turnover, and training costs as well as sales mix are dampening the margins. The operating expense leverage outweighed these pressures, resulting in an improved adjusted operating margin. Adjusted gross margin and adjusted operating margin (Company data, GS Analytics Research)
Investors Shouldn't Overlook The Favourable Returns On Capital At Donaldson Company (NYSE:DCI)
Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key...
Shareholder Returns
| DCI | US Machinery | US Market | |
|---|---|---|---|
| 7D | -1.3% | -0.9% | -2.5% |
| 1Y | -16.4% | -18.6% | -23.2% |
Return vs Industry: DCI exceeded the US Machinery industry which returned -18.3% over the past year.
Return vs Market: DCI exceeded the US Market which returned -23.2% over the past year.
Price Volatility
| DCI volatility | |
|---|---|
| DCI Average Weekly Movement | 3.5% |
| Machinery Industry Average Movement | 5.4% |
| Market Average Movement | 6.8% |
| 10% most volatile stocks in US Market | 15.5% |
| 10% least volatile stocks in US Market | 2.8% |
Stable Share Price: DCI is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.
Volatility Over Time: DCI's weekly volatility (3%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1915 | 14,000 | Tod Carpenter | https://www.donaldson.com |
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.
Donaldson Company Fundamentals Summary
| DCI fundamental statistics | |
|---|---|
| Market Cap | US$6.00b |
| Earnings (TTM) | US$332.80m |
| Revenue (TTM) | US$3.31b |
18.0x
P/E Ratio1.8x
P/S RatioIs DCI overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| DCI income statement (TTM) | |
|---|---|
| Revenue | US$3.31b |
| Cost of Revenue | US$2.24b |
| Gross Profit | US$1.07b |
| Other Expenses | US$734.60m |
| Earnings | US$332.80m |
Last Reported Earnings
Jul 31, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 2.72 |
| Gross Margin | 32.28% |
| Net Profit Margin | 10.06% |
| Debt/Equity Ratio | 57.2% |
How did DCI perform over the long term?
See historical performance and comparisonDividends
1.9%
Current Dividend Yield33%
Payout RatioValuation
Is DCI undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
4/6Valuation Score 4/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast
Key Valuation Metric
Which metric is best to use when looking at relative valuation for DCI?
Other financial metrics that can be useful for relative valuation.
| What is DCI's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$6.00b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 2x |
| Enterprise Value/EBITDA | 12x |
| PEG Ratio | 2.6x |
Price to Earnings Ratio vs Peers
How does DCI's PE Ratio compare to its peers?
| DCI PE Ratio vs Peers |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 66.2x | ||
RBC RBC Bearings | 98.3x | 42.9% | US$6.0b |
GTLS Chart Industries | 131.7x | 41.7% | US$6.6b |
MIDD Middleby | 14.5x | 10.3% | US$6.9b |
LECO Lincoln Electric Holdings | 20.2x | 4.0% | US$7.3b |
DCI Donaldson Company | 18x | 7.0% | US$6.0b |
Price-To-Earnings vs Peers: DCI is good value based on its Price-To-Earnings Ratio (18x) compared to the peer average (66.2x).
Price to Earnings Ratio vs Industry
How does DCI's PE Ratio compare vs other companies in the US Machinery Industry?
Price-To-Earnings vs Industry: DCI is good value based on its Price-To-Earnings Ratio (18x) compared to the US Machinery industry average (18.5x)
Price to Earnings Ratio vs Fair Ratio
What is DCI's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 18x |
| Fair PE Ratio | 17.4x |
Price-To-Earnings vs Fair Ratio: DCI is expensive based on its Price-To-Earnings Ratio (18x) compared to the estimated Fair Price-To-Earnings Ratio (17.4x).
Share Price vs Fair Value
What is the Fair Price of DCI when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: DCI ($49.01) is trading below our estimate of fair value ($84.91)
Significantly Below Fair Value: DCI is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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Future Growth
How is Donaldson Company forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?
Future Growth Score
2/6Future Growth Score 2/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE
7.0%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: DCI's forecast earnings growth (7% per year) is above the savings rate (1.9%).
Earnings vs Market: DCI's earnings (7% per year) are forecast to grow slower than the US market (14.8% per year).
High Growth Earnings: DCI's earnings are forecast to grow, but not significantly.
Revenue vs Market: DCI's revenue (4% per year) is forecast to grow slower than the US market (7.7% per year).
High Growth Revenue: DCI's revenue (4% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: DCI's Return on Equity is forecast to be high in 3 years time (30.8%)
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Past Performance
How has Donaldson Company performed over the past 5 years?
Past Performance Score
6/6Past Performance Score 6/6
Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE
9.8%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: DCI has high quality earnings.
Growing Profit Margin: DCI's current net profit margins (10.1%) are higher than last year (10.1%).
Past Earnings Growth Analysis
Earnings Trend: DCI's earnings have grown by 9.8% per year over the past 5 years.
Accelerating Growth: DCI's earnings growth over the past year (16%) exceeds its 5-year average (9.8% per year).
Earnings vs Industry: DCI earnings growth over the past year (16%) exceeded the Machinery industry 9.8%.
Return on Equity
High ROE: DCI's Return on Equity (29.4%) is considered high.
Discover strong past performing companies
Financial Health
How is Donaldson Company's financial position?
Financial Health Score
5/6Financial Health Score 5/6
Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage
Financial Position Analysis
Short Term Liabilities: DCI's short term assets ($1.4B) exceed its short term liabilities ($629.6M).
Long Term Liabilities: DCI's short term assets ($1.4B) exceed its long term liabilities ($837.5M).
Debt to Equity History and Analysis
Debt Level: DCI's net debt to equity ratio (40.1%) is considered high.
Reducing Debt: DCI's debt to equity ratio has reduced from 69.1% to 57.2% over the past 5 years.
Debt Coverage: DCI's debt is well covered by operating cash flow (39%).
Interest Coverage: DCI's interest payments on its debt are well covered by EBIT (30x coverage).
Balance Sheet
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Dividend
What is Donaldson Company current dividend yield, its reliability and sustainability?
Dividend Score
5/6Dividend Score 5/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
1.88%
Current Dividend Yield
Dividend Yield vs Market
| Donaldson Company Dividend Yield vs Market |
|---|
| Segment | Dividend Yield |
|---|---|
| Company (Donaldson Company) | 1.9% |
| Market Bottom 25% (US) | 1.7% |
| Market Top 25% (US) | 4.7% |
| Industry Average (Machinery) | 2.0% |
| Analyst forecast in 3 Years (Donaldson Company) | 2.0% |
Notable Dividend: DCI's dividend (1.88%) is higher than the bottom 25% of dividend payers in the US market (1.67%).
High Dividend: DCI's dividend (1.88%) is low compared to the top 25% of dividend payers in the US market (4.73%).
Stability and Growth of Payments
Stable Dividend: DCI's dividends per share have been stable in the past 10 years.
Growing Dividend: DCI's dividend payments have increased over the past 10 years.
Earnings Payout to Shareholders
Earnings Coverage: With its reasonably low payout ratio (33.5%), DCI's dividend payments are well covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: With its reasonable cash payout ratio (67.4%), DCI's dividend payments are covered by cash flows.
Discover strong dividend paying companies
Management
How experienced are the management team and are they aligned to shareholders interests?
6.8yrs
Average management tenure
CEO
Tod Carpenter (63 yo)
8.5yrs
Tenure
US$6,878,950
Compensation
Mr. Tod E. Carpenter has been the Chief Executive Officer and President of Donaldson Company, Inc. since April 1, 2015. He serves as Independent Director at AMETEK, Inc. since June 17, 2019. Mr. Carpenter...
CEO Compensation Analysis
| Tod Carpenter's Compensation vs Donaldson Company Earnings |
|---|
| Date | Total Comp. | Salary | Company Earnings |
|---|---|---|---|
| Jul 31 2022 | n/a | n/a | US$333m |
| Apr 30 2022 | n/a | n/a | US$316m |
| Jan 31 2022 | n/a | n/a | US$318m |
| Oct 31 2021 | n/a | n/a | US$302m |
| Jul 31 2021 | US$7m | US$1m | US$287m |
| Apr 30 2021 | n/a | n/a | US$267m |
| Jan 31 2021 | n/a | n/a | US$246m |
| Oct 31 2020 | n/a | n/a | US$254m |
| Jul 31 2020 | US$5m | US$1m | US$257m |
| Apr 30 2020 | n/a | n/a | US$251m |
| Jan 31 2020 | n/a | n/a | US$263m |
| Oct 31 2019 | n/a | n/a | US$258m |
| Jul 31 2019 | US$6m | US$970k | US$267m |
| Apr 30 2019 | n/a | n/a | US$312m |
| Jan 31 2019 | n/a | n/a | US$306m |
| Oct 31 2018 | n/a | n/a | US$193m |
| Jul 31 2018 | US$6m | US$942k | US$180m |
| Apr 30 2018 | n/a | n/a | US$146m |
| Jan 31 2018 | n/a | n/a | US$136m |
| Oct 31 2017 | n/a | n/a | US$236m |
| Jul 31 2017 | US$6m | US$845k | US$233m |
| Apr 30 2017 | n/a | n/a | US$224m |
| Jan 31 2017 | n/a | n/a | US$219m |
| Oct 31 2016 | n/a | n/a | US$210m |
| Jul 31 2016 | US$2m | US$742k | US$191m |
Compensation vs Market: Tod's total compensation ($USD6.88M) is about average for companies of similar size in the US market ($USD8.66M).
Compensation vs Earnings: Tod's compensation has increased by more than 20% in the past year.
Leadership Team
Experienced Management: DCI's management team is seasoned and experienced (6.8 years average tenure).
Board Members
Experienced Board: DCI's board of directors are considered experienced (8.1 years average tenure).
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
| Date | Value | Name | Entity | Role | Shares | Max Price |
|---|---|---|---|---|---|---|
| 17 Dec 21 | SellUS$872 | Thomas Scalf | Individual | 15 | US$58.12 |
Ownership Breakdown
| Owner Type | Number of Shares | Ownership Percentage |
|---|---|---|
| State or Government | 52,180 | 0.04% |
| Individual Insiders | 643,469 | 0.5% |
| General Public | 21,778,177 | 17.8% |
| Institutions | 100,023,689 | 81.7% |
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Top Shareholders
| Ownership | Name | Shares | Current Value | Change % | Portfolio % | |
|---|---|---|---|---|---|---|
| 12,472,440 | $611.3m | 1.31% | 0.01% | |||
| 10,897,564 | $534.1m | -0.9% | 0.01% | |||
| 10,088,753 | $494.4m | 0% | 0.58% | |||
| 6,767,711 | $331.7m | 13.88% | 0.02% | |||
| 3,966,859 | $194.4m | 6.43% | 0.31% | |||
| 3,114,007 | $152.6m | -5.9% | 1.89% | |||
| 3,073,029 | $150.6m | -1.37% | 0.07% | |||
| 2,579,647 | $126.4m | 1.56% | 1.25% | |||
| 2,456,274 | $120.4m | 0.56% | 0.01% | |||
| 2,030,890 | $99.5m | -0.95% | 0.3% | |||
| 1,869,845 | $91.6m | 11.75% | 0.01% | |||
| 1,712,517 | $83.9m | 28.49% | 0.69% | |||
| 1,634,167 | $80.1m | 10.98% | 0.27% | |||
| 1,552,988 | $76.1m | 1.94% | 0.02% | |||
| 1,502,897 | $73.7m | 11% | 0.06% | |||
| 1,310,439 | $64.2m | -3.28% | 0.08% | |||
| 1,222,788 | $59.9m | -6.47% | 0.03% | |||
| 1,202,908 | $59.0m | 4.1% | 0.02% | |||
| 1,197,560 | $58.7m | -0.31% | 0.26% | |||
| 1,184,476 | $58.1m | 0% | 0.01% | |||
| 983,153 | $48.2m | -6.44% | 0.01% | |||
| 915,428 | $44.9m | 5.93% | 0.03% | |||
| 804,318 | $39.4m | 2.13% | 0.03% | |||
| 737,101 | $36.1m | -5.88% | 0.26% | |||
| 709,011 | $34.7m | -0.35% | 2.73% |
Company Information
Donaldson Company, Inc.'s employee growth, exchange listings and data sources
Key Information
- Name: Donaldson Company, Inc.
- Ticker: DCI
- Exchange: NYSE
- Founded: 1915
- Industry: Industrial Machinery
- Sector: Capital Goods
- Implied Market Cap: US$6.004b
- Shares outstanding: 122.50m
- Website: https://www.donaldson.com
Number of Employees
Location
- Donaldson Company, Inc.
- 1400 West 94th Street
- Bloomington
- Minnesota
- 55431
- United States
Listings
| Ticker | Exchange | Primary Security | Security Type | Country | Currency | Listed on |
|---|---|---|---|---|---|---|
| DCI | NYSE (New York Stock Exchange) | Yes | Common Stock | US | USD | Jan 1969 |
| DNZ | DB (Deutsche Boerse AG) | Yes | Common Stock | DE | EUR | Jan 1969 |
| DCI * | BMV (Bolsa Mexicana de Valores) | Yes | Common Stock | MX | MXN | Jan 1969 |
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/10/02 00:00 |
| End of Day Share Price | 2022/09/30 00:00 |
| Earnings | 2022/07/31 |
| Annual Earnings | 2022/07/31 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.