We have issued an updated research report on Donaldson Company, Inc. (DCI - Free Report) on Apr 2.
This pollution control company currently carries a Zacks Rank #4 (Sell). Its market capitalization is approximately $6.6 billion.
Let’s delve deeper and discuss what led to the company’s poor investment appeal.
Share Price Performances & Poor Valuation: Market sentiments have been against Donaldson for quite some time now. Its stock price has decreased roughly 10.9% in the past six months versus the industry’s decline of 6.8%.
Also, the stock appears overvalued compared with the industry. On an Enterprise Value/EBITDA (TTM) basis, the company’s shares are currently trading at 15.4x compared with the industry’s 9.5x. Also, Donaldson's multiple is higher than the industry's six-month highest level of 10.3x.
Earnings Estimate Revision: Donaldson delivered weaker-than-expected results for second-quarter fiscal 2019 (ended Jan 31, 2019). The quarter’s earnings lagged the Zacks Consensus Estimate by 7.8%. This poor performance came in after the company delivered negative earnings surprise of 1.75% in the previous quarter.
For fiscal 2019 (ending July 2019), Donaldson expects earnings to be $2.27-$2.41, down from $2.31-$2.45 mentioned earlier.
Further, earnings estimates for the company have been lowered in the past 60 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $2.33 for fiscal 2019 and $2.54 for fiscal 2020, reflecting declines of 2.5% and 2.3% from the respective 60-day-ago tallies.
Donaldson Company, Inc. Price and Consensus