We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
DCI is seeing solid growth in all segments, led by aerospace, life sciences and aftermarket demand.
Acquisitions like Medica and Univercells boost DCI's filtration and life sciences capabilities.
Higher costs and declines in on-road and off-road sales are weighing on DCI's margins and performance.
Donaldson Company, Inc. (DCI - Free Report) is benefiting from solid momentum across all segments. The Mobile Solutions segment is gaining from higher volume in the aftermarket business, driven by positive market trends and the impact of expanded market share. The Industrial Solutions segment is gaining from persistent strength in the aerospace and defense business. Robust momentum in the commercial aerospace due to increased demand for new equipment, as well as solid demand in defense markets due to the increased orders and porting activity, bodes well for the segment. An increase in demand for disk drives and food & beverage products in the Asia Pacific region is boosting the Life Sciences segment.
DCI solidified its product portfolio and leveraged business opportunities through asset additions. In August 2024, Donaldson acquired a 49% minority stake in Medica S.p.A. The inclusion of Medica’s technology and expertise in filtration products enabled the company to penetrate new markets and diversify its offerings in the medical device and water purification sectors. In June 2023, Donaldson acquired Univercells Technologies, expanding its growing offering in the life sciences industry. Univercells was added to DCI’s Life Sciences segment.
Donaldson’s commitment to rewarding shareholders through dividends and share buybacks is encouraging. The company paid dividends worth $96.9 million in the first nine months of fiscal 2025 (ended April 30, 2025). It also bought back shares worth $273.8 million in the same period. It is worth noting that its quarterly dividend was hiked 11.1% in May 2025. The company has raised its dividend for 29 consecutive years.
Also, in November 2023, its board of directors approved a new repurchase program, authorizing it to repurchase up to 12 million shares of its common stock. The new repurchase program replaced the previous one, which was approved in 2019.
DCI’s Price Performance
In the year-to-date period, this Zacks Rank #3 (Hold) company’s shares have gained 6.3% against the industry’s 2.1% decline.
Image Source: Zacks Investment Research
Downsides of DCI
Weakness in the on-road and off-road businesses is concerning for the company. Lower levels of global truck production, owing to softness in the industrial markets, are affecting Donaldson's on-road business. Weakness in the agriculture markets and soft end-market demand globally are upsetting its off-road business. In the third quarter of fiscal 2025, the on-road and off-road business’ sales declined 24.6% and 8.3%, respectively, on a year-over-year basis.
DCI has been dealing with the adverse impacts of high selling, general and administrative expenses. Increasing manufacturing costs are pushing up the cost of sales, which increased 3% to $1.76 billion in the first nine months of fiscal 2025.
The impact of these expenditures is evident in the rise of the cost of sales as a percentage of total revenues, which climbed 40 basis points to reach 60%. Also, in the first nine months, the overall operating expenses increased 11.4% year over year to $603.7 million. The metric, as a percentage of total revenues, increased 190 basis points to 22.3%.
LIF delivered a trailing four-quarter average earnings surprise of 425%. In the past 60 days, the Zacks Consensus Estimate for Life360’s 2025 earnings has increased 20%.
Alarm.com Holdings, Inc. (ALRM - Free Report) presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 15.7%.
The Zacks Consensus Estimate for ALRM’s 2025 earnings has remained steady in the past 60 days.
Broadwind, Inc. (BWEN - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 61.1%.
In the past 60 days, the consensus estimate for BWEN’s 2025 earnings has increased 14.3%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Donaldson Stock Exhibits Strong Prospects Despite Persisting Headwinds
Key Takeaways
Donaldson Company, Inc. (DCI - Free Report) is benefiting from solid momentum across all segments. The Mobile Solutions segment is gaining from higher volume in the aftermarket business, driven by positive market trends and the impact of expanded market share. The Industrial Solutions segment is gaining from persistent strength in the aerospace and defense business. Robust momentum in the commercial aerospace due to increased demand for new equipment, as well as solid demand in defense markets due to the increased orders and porting activity, bodes well for the segment. An increase in demand for disk drives and food & beverage products in the Asia Pacific region is boosting the Life Sciences segment.
DCI solidified its product portfolio and leveraged business opportunities through asset additions. In August 2024, Donaldson acquired a 49% minority stake in Medica S.p.A. The inclusion of Medica’s technology and expertise in filtration products enabled the company to penetrate new markets and diversify its offerings in the medical device and water purification sectors. In June 2023, Donaldson acquired Univercells Technologies, expanding its growing offering in the life sciences industry. Univercells was added to DCI’s Life Sciences segment.
Donaldson’s commitment to rewarding shareholders through dividends and share buybacks is encouraging. The company paid dividends worth $96.9 million in the first nine months of fiscal 2025 (ended April 30, 2025). It also bought back shares worth $273.8 million in the same period. It is worth noting that its quarterly dividend was hiked 11.1% in May 2025. The company has raised its dividend for 29 consecutive years.
Also, in November 2023, its board of directors approved a new repurchase program, authorizing it to repurchase up to 12 million shares of its common stock. The new repurchase program replaced the previous one, which was approved in 2019.
DCI’s Price Performance
In the year-to-date period, this Zacks Rank #3 (Hold) company’s shares have gained 6.3% against the industry’s 2.1% decline.
Image Source: Zacks Investment Research
Downsides of DCI
Weakness in the on-road and off-road businesses is concerning for the company. Lower levels of global truck production, owing to softness in the industrial markets, are affecting Donaldson's on-road business. Weakness in the agriculture markets and soft end-market demand globally are upsetting its off-road business. In the third quarter of fiscal 2025, the on-road and off-road business’ sales declined 24.6% and 8.3%, respectively, on a year-over-year basis.
DCI has been dealing with the adverse impacts of high selling, general and administrative expenses. Increasing manufacturing costs are pushing up the cost of sales, which increased 3% to $1.76 billion in the first nine months of fiscal 2025.
The impact of these expenditures is evident in the rise of the cost of sales as a percentage of total revenues, which climbed 40 basis points to reach 60%. Also, in the first nine months, the overall operating expenses increased 11.4% year over year to $603.7 million. The metric, as a percentage of total revenues, increased 190 basis points to 22.3%.
Stocks to Consider
Some better-ranked companies are discussed below:
Life360, Inc. (LIF - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
LIF delivered a trailing four-quarter average earnings surprise of 425%. In the past 60 days, the Zacks Consensus Estimate for Life360’s 2025 earnings has increased 20%.
Alarm.com Holdings, Inc. (ALRM - Free Report) presently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 15.7%.
The Zacks Consensus Estimate for ALRM’s 2025 earnings has remained steady in the past 60 days.
Broadwind, Inc. (BWEN - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 61.1%.
In the past 60 days, the consensus estimate for BWEN’s 2025 earnings has increased 14.3%.