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Here's Why Investing in Donaldson (DCI) Stock Makes Sense Now

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Donaldson Company, Inc. (DCI - Free Report) is poised to gain from strength in the Industrial Solutions segment, acquired assets and shareholder-friendly moves.

Let’s delve into the factors that make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.

Growth Catalysts

Business Strength: A diversified business structure with exposure in various geographies and end markets like construction, mining, aerospace, defense, and food & beverage is a boon for Donaldson. The Industrial Solutions segment is supported by continued strength in dust collection and power generation verticals within the industrial filtration solutions business. Increasing defense sales within the Aerospace and Defense business are also aiding the segment. The Mobile segment is benefiting from strength in aftermarket business while recovery in Disk Drive demand is boosting the Life Sciences segment.

Accretive Acquisitions: DCI’s expansion initiative is expected to drive growth. In June 2023, the company acquired Univercells Technologies, thereby expanding its growing offering in the life sciences industry. Univercells will be added to Donaldson’s Life Sciences segment. The company acquired Isolere Bio in February 2023. The Isolere buyout enables Donaldson to create leading separation and filtration solutions for emerging genetic-based drugs and Isolere’s revenues are reported within the Donaldson Life Sciences segment.

Rewards to Shareholders: Donaldson is committed to rewarding its shareholders handsomely through dividends and share buybacks. Dividend payments totaled $60.3 million in the first six months of fiscal 2024 (ended Jan 31, 2024). The company bought back shares worth $87.1 million in the first six months of the fiscal year. It is worth noting that the company’s quarterly dividend was hiked 8.7% in May 2023. Donaldson has raised its dividend for 27 consecutive years. In November 2023, the company’s board of directors approved a new repurchase program, authorizing the repurchase of up to 12 million shares of its common stock. The new repurchase program replaced the previous one, which was approved in 2019. For fiscal 2024, the company plans to buy back approximately 2% of its outstanding shares.

Northward Estimate Revision: The Zacks Consensus Estimate for DCI’s fiscal 2024 (ending July 2024) earnings has been revised 1.9% upward in the past 60 days.

Price Performance: Shares of DCIhave risen 19.4% in the past year, outperforming the industry’s 14.1% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

Other Stocks to Consider

Some other top-ranked companies from the Industrial Products sector are discussed below.

Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 8.2%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 2.1% in the past 60 days. The stock has risen 57.9% in the past year.

Belden Inc. (BDC - Free Report) presently carries a Zacks Rank of 2 and has a trailing four-quarter earnings surprise of 14.7%, on average.

The consensus estimate for BDC’s 2024 earnings has increased 8.3% in the past 60 days. Shares of Belden have risen 13.2% in the past year.

Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.

The Zacks Consensus Estimate for CR’s 2024 earnings has increased 3.3% in the past 60 days. Its shares have risen 97% in the past year.

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