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Donaldson (DCI) Up 19.1% in 1 Year: Will the Trend Continue?

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Donaldson Company, Inc. (DCI - Free Report) appears to be in good shape, with its shares having increased by 19.1% in the past year against the industry’s 1% decline.

What’s Aiding DCI?

Donaldson’s Industrial Solutions segment is supported by continued strength in dust collection sales and power generation project timing within the industrial filtration solutions business. Increasing defense sales within the Aerospace and Defense business is also aiding the segment.

Through asset additions, the company has been strengthening and expanding its business for a while. DCI acquired Univercells Technologies in June 2023, expanding its growing offering in the life sciences industry. Univercells is a part of Donaldson’s Life Sciences segment.

Donaldson acquired Isolere Bio in February 2023. The Isolere buyout enables the company to create leading separation and filtration solutions for emerging genetic-based drugs. Isolere’s revenues are reported within the Donaldson Life Sciences segment.

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The company utilizes its cash flow to reward its shareholders through dividend payouts and share repurchases. Dividend payments totaled $114.4 million in fiscal 2023 (ended July 2023). The company bought back shares worth $141.8 million in fiscal 2023. It is worth noting that DCI’s quarterly dividend was hiked by 8.7% in May 2023. The company has raised its dividend for 27 consecutive years.

Will the Momentum Continue?

Donaldson is expected to benefit from its strong product portfolio, solid demand, focus on innovation and growth investments in the Life Sciences segment in the quarter ahead. Its improving supply chain condition is likely to be beneficial as well.

However, softness in Donaldson’s Mobile Solutions segment due to weak end-market demand in the Americas and China within the Off-Road business and inventory destocking in the original equipment portion within the Aftermarket business is concerning for the company. Rising operating costs may dent the company’s bottom line in the near term.

Zacks Rank & Stocks to Consider

Donaldson currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:

Caterpillar Inc. (CAT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CAT’s earnings surprise in the last four quarters was 17.8%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased by 10.6% for 2023. The stock has gained 51.2% in the past year.

Ingersoll Rand Inc. (IR - Free Report) presently sports a Zacks Rank #1. IR’s earnings surprise in the last four quarters was 14.9%, on average.

In the past 60 days, estimates for Ingersoll Rand’s earnings have increased by 2.2% for 2023. The stock has gained 33.3% in the past year.

Eaton Corporation plc (ETN - Free Report) currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of approximately 3%, on average.

In the past 60 days, estimates for Eaton’s earnings have increased by 3.9% for 2023. The stock has soared 56.9% in the past year.

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