Donaldson Company, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Investors in Donaldson Company, Inc. (NYSE:DCI) had a good week, as its shares rose 8.6% to close at US$72.52 following the release of its quarterly results. The result was positive overall - although revenues of US$877m were in line with what the analysts predicted, Donaldson Company surprised by delivering a statutory profit of US$0.81 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Donaldson Company

Taking into account the latest results, the most recent consensus for Donaldson Company from eight analysts is for revenues of US$3.57b in 2024. If met, it would imply a satisfactory 2.6% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 4.7% to US$3.28. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.57b and earnings per share (EPS) of US$3.19 in 2024. So the consensus seems to have become somewhat more optimistic on Donaldson Company's earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 7.1% to US$70.00. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Donaldson Company analyst has a price target of US$77.00 per share, while the most pessimistic values it at US$59.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 5.3% growth on an annualised basis. That is in line with its 5.9% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.2% per year. So it's pretty clear that Donaldson Company is forecast to grow substantially faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Donaldson Company's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Donaldson Company. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Donaldson Company going out to 2026, and you can see them free on our platform here..

It might also be worth considering whether Donaldson Company's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.