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Why Is Donaldson (DCI) Down 6.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Donaldson (DCI - Free Report) . Shares have lost about 6.3% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Donaldson due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Donaldson Company, Inc. before we dive into how investors and analysts have reacted as of late.
Donaldson Q4 Earnings & Revenues Beat Estimates on Volume
Donaldson reported fourth-quarter fiscal 2026 (ended July 31, 2026) adjusted earnings of $1.15 per share, up 11.7% year over year and above the Zacks Consensus Estimate of $1.12 by 2.7%. Higher volume, pricing and favorable mix supported the quarter.
Revenue Results
Revenues of $1.06 billion rose 8.0% in the fiscal fourth quarter and beat the $1.04 billion consensus by 1.5%.
Region-wise, Donaldson’s net sales in the United States/Canada increased 8.4% year over year. Net sales increased 6.9% in Europe, the Middle East and Africa. Latin America sales increased 7.2%, while net sales in the Asia Pacific improved 9.3%.
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 60.0% of net sales) sales were $634.9 million, indicating a year-over-year increase of 7.9%. Sales rose 0.1% in Off-Road and increased 8.7% in On-Road businesses during the quarter. Aftermarket sales improved 9.4% year over year.
Revenues generated from the Industrial Solutions segment (31.5%) were $333.5 million, up 7.7% year over year. Industrial Filtration Solutions' sales decreased 2.0% year over year. Aerospace and Defense sales jumped 61.0%, reflecting the inclusion of Facet.
Revenues generated from the Life Sciences segment (8.5%) were $90.4 million, up 9.7% year over year. The results benefited from double-digit growth in the Disk Drive business and solid Food and Beverage sales.
Donaldson’s Margin Profile
In the fiscal fourth quarter, Donaldson’s cost of sales increased 5.1% year over year to $674.9 million. Gross profit increased 13.3% to $383.9 million. The gross margin of 36.3% expanded 180 basis points, primarily due to higher volume, pricing and mix, partially offset by increased input costs and continued Power Generation production inefficiencies. Selling, general and administrative expenses were $188.2 million, up 14.3% year over year.
Operating expenses increased 10.8% year over year to $207.3 million. Operating profit rose 16.4% to $176.6 million. The adjusted operating margin was 17.5%, up 110 bps year over year.
The adjusted effective tax rate was 22.6% compared with 23.7% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the fiscal fourth quarter, Donaldson’s cash and cash equivalents were $250.4 million compared with $180.4 million in the fourth quarter of fiscal 2025. Long-term debt was $1.28 billion compared with $630.4 million in the fourth quarter of fiscal 2025.
In the fiscal fourth quarter, the company generated net cash of $199.9 million from operating activities, indicating an increase of 19.1% year over year. Capital expenditure (net) totaled $14.7 million compared with $18.1 million in the year-ago fiscal quarter. Free cash flow increased 23.7% to $185.2 million.
It used $108.5 million to repurchase stocks and $141.2 million to pay out dividends during fiscal 2026.
Donaldson’s Fiscal 2027 Outlook
For fiscal 2027 (ending July 2027), Donaldson expects earnings per share (EPS) to be in the range of $4.22-$4.38 compared with adjusted EPS of $3.98 in fiscal 2026. Sales are anticipated to increase 5.5-9.5% from the fiscal 2026 level, including an approximately 2% benefit each from Facet sales and pricing and a 1% foreign currency tailwind.
On a segmental basis, Mobile Solutions’ sales are expected to increase 2-6% from the fiscal 2026 level. Industrial Solutions’ sales are envisioned to increase in the mid-teens range from the year-ago figure. The company forecasts its Life Sciences segment’s sales to increase in the 7-11% range.
Interest expenses are predicted to be between $55 million and $60 million, while other income is projected to be in the range of $16-$20 million. The effective tax rate is anticipated to be between 23.5% and 25.5%.
Capital expenditure is expected to be between $70 million and $90 million. Free cash flow conversion is anticipated to be in the range of 95-105%. Donaldson expects to repurchase approximately 1% of its outstanding shares during the fiscal year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.53% due to these changes.
VGM Scores
At this time, Donaldson has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Donaldson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
View the Zacks #1 Rank List
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Why Is Donaldson (DCI) Down 6.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Donaldson (DCI - Free Report) . Shares have lost about 6.3% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Donaldson due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Donaldson Company, Inc. before we dive into how investors and analysts have reacted as of late.
Donaldson Q4 Earnings & Revenues Beat Estimates on Volume
Donaldson reported fourth-quarter fiscal 2026 (ended July 31, 2026) adjusted earnings of $1.15 per share, up 11.7% year over year and above the Zacks Consensus Estimate of $1.12 by 2.7%. Higher volume, pricing and favorable mix supported the quarter.
Revenue Results
Revenues of $1.06 billion rose 8.0% in the fiscal fourth quarter and beat the $1.04 billion consensus by 1.5%.
Region-wise, Donaldson’s net sales in the United States/Canada increased 8.4% year over year. Net sales increased 6.9% in Europe, the Middle East and Africa. Latin America sales increased 7.2%, while net sales in the Asia Pacific improved 9.3%.
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 60.0% of net sales) sales were $634.9 million, indicating a year-over-year increase of 7.9%. Sales rose 0.1% in Off-Road and increased 8.7% in On-Road businesses during the quarter. Aftermarket sales improved 9.4% year over year.
Revenues generated from the Industrial Solutions segment (31.5%) were $333.5 million, up 7.7% year over year. Industrial Filtration Solutions' sales decreased 2.0% year over year. Aerospace and Defense sales jumped 61.0%, reflecting the inclusion of Facet.
Revenues generated from the Life Sciences segment (8.5%) were $90.4 million, up 9.7% year over year. The results benefited from double-digit growth in the Disk Drive business and solid Food and Beverage sales.
Donaldson’s Margin Profile
In the fiscal fourth quarter, Donaldson’s cost of sales increased 5.1% year over year to $674.9 million. Gross profit increased 13.3% to $383.9 million. The gross margin of 36.3% expanded 180 basis points, primarily due to higher volume, pricing and mix, partially offset by increased input costs and continued Power Generation production inefficiencies. Selling, general and administrative expenses were $188.2 million, up 14.3% year over year.
Operating expenses increased 10.8% year over year to $207.3 million. Operating profit rose 16.4% to $176.6 million. The adjusted operating margin was 17.5%, up 110 bps year over year.
The adjusted effective tax rate was 22.6% compared with 23.7% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the fiscal fourth quarter, Donaldson’s cash and cash equivalents were $250.4 million compared with $180.4 million in the fourth quarter of fiscal 2025. Long-term debt was $1.28 billion compared with $630.4 million in the fourth quarter of fiscal 2025.
In the fiscal fourth quarter, the company generated net cash of $199.9 million from operating activities, indicating an increase of 19.1% year over year. Capital expenditure (net) totaled $14.7 million compared with $18.1 million in the year-ago fiscal quarter. Free cash flow increased 23.7% to $185.2 million.
It used $108.5 million to repurchase stocks and $141.2 million to pay out dividends during fiscal 2026.
Donaldson’s Fiscal 2027 Outlook
For fiscal 2027 (ending July 2027), Donaldson expects earnings per share (EPS) to be in the range of $4.22-$4.38 compared with adjusted EPS of $3.98 in fiscal 2026. Sales are anticipated to increase 5.5-9.5% from the fiscal 2026 level, including an approximately 2% benefit each from Facet sales and pricing and a 1% foreign currency tailwind.
On a segmental basis, Mobile Solutions’ sales are expected to increase 2-6% from the fiscal 2026 level. Industrial Solutions’ sales are envisioned to increase in the mid-teens range from the year-ago figure. The company forecasts its Life Sciences segment’s sales to increase in the 7-11% range.
Interest expenses are predicted to be between $55 million and $60 million, while other income is projected to be in the range of $16-$20 million. The effective tax rate is anticipated to be between 23.5% and 25.5%.
Capital expenditure is expected to be between $70 million and $90 million. Free cash flow conversion is anticipated to be in the range of 95-105%. Donaldson expects to repurchase approximately 1% of its outstanding shares during the fiscal year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.53% due to these changes.
VGM Scores
At this time, Donaldson has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Donaldson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.