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.
Donaldson's Q2 Earnings Miss Estimates, Revenues Increase Y/Y
Read MoreHide Full Article
Key Takeaways
Donaldson posted Q2 EPS of 83 cents, missing estimates; sales rose 3% to $896M.
DCI gross margin fell 170 bps to 33.5% on production inefficiencies.
Donaldson sees FY26 EPS of $3.93-$4.01 and sales growth of 1-5%.
Donaldson Company, Inc. (DCI - Free Report) reported second-quarter fiscal 2026 (ended Jan. 31, 2026) adjusted earnings of 83 cents per share, which missed the Zacks Consensus Estimate of 90 cents. The bottom line was flat on a year-over-year basis.
DCI’s Revenue Results
Total revenues of $896.3 million lagged the Zacks Consensus Estimate of $898 million. The top line increased 3% year over year. Region-wise, Donaldson’s net sales in the United States/Canada decreased 4.7% year over year. The metric increased 16% year over year in Europe, the Middle East and Africa, and decreased 5.2% in Latin America. Also, net sales in the Asia Pacific improved 8.7%.
Donaldson reports revenues under three segments, namely Mobile Solutions, Industrial Solutions and Life Sciences.
A brief snapshot of segmental sales is provided below.
The Mobile Solutions segment’s (accounting for 62.1% of net sales) sales were $556.6 million, indicating a year-over-year increase of 1.6%. Sales rose 7.8% in Off-Road and decreased 9.2% in On-Road businesses during the quarter. Aftermarket sales improved 1.1% year over year.
Revenues generated from the Industrial Solutions segment (29%) were $259.7 million, up 2.4% year over year. Industrial Filtration Solutions' sales increased 7.2% year over year. Sales decline of 19.4% in the Aerospace and Defense businesses affected the results.
Revenues generated from the Life Sciences segment (8.9%) were $80 million, up 16.2% year over year. The results benefited from an increase in new equipment and replacement part sales in the Food & Beverage and Disk Drive businesses.
Donaldson Company, Inc. Price, Consensus and EPS Surprise
In the fiscal second quarter, Donaldson’s cost of sales increased 5.7% year over year to $596.5 million. Gross profit decreased 2% to $299.8 million. The gross margin of 33.5% declined 170 basis points due to operating inefficiencies associated with production shifts and costs related to footprint optimization initiatives.
Operating expenses were up 0.5% year over year to $181.1 million. Operating profit decreased 5.6% to $118.7 million. The operating margin was 13.2%, down 120 bps year over year.
The effective tax rate was 20.7% compared with 23.2% in the year-ago quarter.
Balance Sheet & Cash Flow of DCI
Exiting the fiscal second quarter, Donaldson’s cash and cash equivalents were $194.4 million compared with $180.4 million in the fourth quarter of fiscal 2025. Long-term debt was $674.3 million compared with $630.4 million in the fourth quarter of fiscal 2025.
In the first six months of fiscal 2026, the company generated net cash of $158.4 million from operating activities, indicating a decrease of 3% year over year. Capital expenditure (net) totaled $28.7 million compared with $43.9 million in the year-ago fiscal period. Free cash flow increased 8.6% to $129.7 million.
It used $108.6 million to repurchase stocks and $69.3 million to pay out dividends during the first six months of fiscal 2026.
Donaldson’s FY26 Outlook
For fiscal 2026 (ending July 2026), Donaldson expects adjusted earnings per share (EPS) to be in the range of $3.93-$4.01 compared with $3.68 in fiscal 2025. Sales are anticipated to increase 1- 5% from the fiscal 2025 level. Positive pricing is projected to have an accretive impact of 1%.
On a segmental basis, Mobile Solutions’ sales are expected to increase 2-6% from the fiscal 2025 level. Industrial Solutions’ sales are envisioned be in the range of (1)-3% from the year-ago figure. The company forecasts its Life Sciences segment’s sales to increase in the 5-9% range.
Interest expenses are predicted to be approximately $26 million, while other income is projected to be in the range of $17-$19 million. The effective tax rate is anticipated to be between 22% and 24%.
Capital expenditure is expected to be between $60 million and $75 million. Free cash flow conversion is anticipated to be in the range of 85-95%. Donaldson expects to repurchase 1.2% of its outstanding shares during the fiscal year.
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank #2 (Buy). Nordson’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 2.5%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 1.4%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. Parker-Hannifin’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 6.8%. In the past 60 days, the Zacks Consensus Estimate for Parker-Hannifin’s fiscal 2026 earnings has increased 2.3%.
RBC Bearings (RBC - Free Report) presently carries a Zacks Rank of 2. RBC Bearings’ earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 5.3%. In the past 60 days, the Zacks Consensus Estimate for RBC Bearings’ fiscal 2026 earnings has increased 4.6%.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
Donaldson's Q2 Earnings Miss Estimates, Revenues Increase Y/Y
Key Takeaways
Donaldson Company, Inc. (DCI - Free Report) reported second-quarter fiscal 2026 (ended Jan. 31, 2026) adjusted earnings of 83 cents per share, which missed the Zacks Consensus Estimate of 90 cents. The bottom line was flat on a year-over-year basis.
DCI’s Revenue Results
Total revenues of $896.3 million lagged the Zacks Consensus Estimate of $898 million. The top line increased 3% year over year.
Region-wise, Donaldson’s net sales in the United States/Canada decreased 4.7% year over year. The metric increased 16% year over year in Europe, the Middle East and Africa, and decreased 5.2% in Latin America. Also, net sales in the Asia Pacific improved 8.7%.
Donaldson reports revenues under three segments, namely Mobile Solutions, Industrial Solutions and Life Sciences.
A brief snapshot of segmental sales is provided below.
The Mobile Solutions segment’s (accounting for 62.1% of net sales) sales were $556.6 million, indicating a year-over-year increase of 1.6%. Sales rose 7.8% in Off-Road and decreased 9.2% in On-Road businesses during the quarter. Aftermarket sales improved 1.1% year over year.
Revenues generated from the Industrial Solutions segment (29%) were $259.7 million, up 2.4% year over year. Industrial Filtration Solutions' sales increased 7.2% year over year. Sales decline of 19.4% in the Aerospace and Defense businesses affected the results.
Revenues generated from the Life Sciences segment (8.9%) were $80 million, up 16.2% year over year. The results benefited from an increase in new equipment and replacement part sales in the Food & Beverage and Disk Drive businesses.
Donaldson Company, Inc. Price, Consensus and EPS Surprise
Donaldson Company, Inc. price-consensus-eps-surprise-chart | Donaldson Company, Inc. Quote
Donaldson’s Margin Profile
In the fiscal second quarter, Donaldson’s cost of sales increased 5.7% year over year to $596.5 million. Gross profit decreased 2% to $299.8 million. The gross margin of 33.5% declined 170 basis points due to operating inefficiencies associated with production shifts and costs related to footprint optimization initiatives.
Operating expenses were up 0.5% year over year to $181.1 million. Operating profit decreased 5.6% to $118.7 million. The operating margin was 13.2%, down 120 bps year over year.
The effective tax rate was 20.7% compared with 23.2% in the year-ago quarter.
Balance Sheet & Cash Flow of DCI
Exiting the fiscal second quarter, Donaldson’s cash and cash equivalents were $194.4 million compared with $180.4 million in the fourth quarter of fiscal 2025. Long-term debt was $674.3 million compared with $630.4 million in the fourth quarter of fiscal 2025.
In the first six months of fiscal 2026, the company generated net cash of $158.4 million from operating activities, indicating a decrease of 3% year over year. Capital expenditure (net) totaled $28.7 million compared with $43.9 million in the year-ago fiscal period. Free cash flow increased 8.6% to $129.7 million.
It used $108.6 million to repurchase stocks and $69.3 million to pay out dividends during the first six months of fiscal 2026.
Donaldson’s FY26 Outlook
For fiscal 2026 (ending July 2026), Donaldson expects adjusted earnings per share (EPS) to be in the range of $3.93-$4.01 compared with $3.68 in fiscal 2025. Sales are anticipated to increase 1- 5% from the fiscal 2025 level. Positive pricing is projected to have an accretive impact of 1%.
On a segmental basis, Mobile Solutions’ sales are expected to increase 2-6% from the fiscal 2025 level. Industrial Solutions’ sales are envisioned be in the range of (1)-3% from the year-ago figure. The company forecasts its Life Sciences segment’s sales to increase in the 5-9% range.
Interest expenses are predicted to be approximately $26 million, while other income is projected to be in the range of $17-$19 million. The effective tax rate is anticipated to be between 22% and 24%.
Capital expenditure is expected to be between $60 million and $75 million. Free cash flow conversion is anticipated to be in the range of 85-95%. Donaldson expects to repurchase 1.2% of its outstanding shares during the fiscal year.
DCI’s Zacks Rank
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks are discussed below:
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank #2 (Buy). Nordson’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 2.5%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 1.4%.
Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2. Parker-Hannifin’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 6.8%. In the past 60 days, the Zacks Consensus Estimate for Parker-Hannifin’s fiscal 2026 earnings has increased 2.3%.
RBC Bearings (RBC - Free Report) presently carries a Zacks Rank of 2. RBC Bearings’ earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 5.3%. In the past 60 days, the Zacks Consensus Estimate for RBC Bearings’ fiscal 2026 earnings has increased 4.6%.