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Here's Why It Is Worth Investing in Donaldson (DCI) Right Now
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Donaldson Company, Inc. (DCI - Free Report) currently boasts robust prospects on strength in its businesses, solid product portfolio, acquisitions and growth investments.
Image Source: Zacks Investment Research
This Zacks Rank #2 (Buy) company has a market capitalization of $6.3 billion. In the past month, the stock has gained 4.4% compared with the industry’s growth of 4.2%.
Let’s delve into the factors that make investment in the company a smart decision at the moment.
Business Strength: Donaldson has been benefiting from its diversified business operations, with exposure in various geographies and end markets like construction, mining, aerospace, defense, and food & beverage. In the quarters ahead, the company is expected to benefit from its strong product portfolio, solid demand, focus on innovation and growth investments. Driven by solid segmental demand, its sales improved 18.2% year over year in second-quarter fiscal 2022 (ended January 2022), resulting in earnings growth of 9.6% from the year-ago quarter. The company’s Engine Products segment recorded a 19.8% increase in sales. Industrial Products’ sales expanded 14.6% year over year. Net sales are likely to increase 11-15% year over year in fiscal 2022 (ending July 2022), higher than 8-12% anticipated earlier.
Acquisition Benefits: The company intends to strengthen and expand its businesses through acquisitions. Its buyout of Solaris Biotechnology (in November 2021) has been strengthening its presence across several end markets, including food and beverage, biopharma and other major life sciences. The company also acquired Pearson Arnold Industrial Services in the same month.
Rewards to Shareholders: It remains committed to rewarding shareholders through dividend payouts and share buyback programs. For instance, in the first six months of fiscal 2022, Donaldson paid out dividends worth $54.6 million and repurchased shares worth $115.6 million. Further, it hiked its quarterly dividend rate by 4.8% in May 2021. The company expects free cash flow conversion of 70-80% and plans to buy back 2% of its outstanding shares for fiscal 2022.
Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for its fiscal 2022 (ending July 2022) earnings has moved up from $2.68 to $2.70 on three upward estimate revisions against none downward. Further, the consensus estimate for its fiscal 2023 (ending July 2023) earnings has increased from $2.97 to $3.03 on four upward estimate revisions versus none downward.
Other Stocks to Consider
Some other top-ranked companies from the Zacks Industrial Products sector are discussed below.
Alcoa Corporation (AA - Free Report) presently sports a Zacks Rank #1 (Strong Buy). Its earnings surprise in the last four quarters was 27.1%, on average.
In the past 60 days, Alcoa’s earnings estimates have increased 86.5% for 2022. AA’s shares have gained 2.7% in the past month.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 14.2%, on average.
In the past 60 days, earnings estimates for Ferguson have increased 7% for fiscal 2022 (ending July 2022). Ferguson’s shares have declined 5.5% in the past month.
AGCO Corporation (AGCO - Free Report) presently carries a Zacks Rank #2. The company delivered a four-quarter earnings surprise of 56.7%, on average.
The earnings estimates for AGCO have increased 10.7% for 2022 in the past 60 days. Its shares have increased 18.9% in the past month.
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Here's Why It Is Worth Investing in Donaldson (DCI) Right Now
Donaldson Company, Inc. (DCI - Free Report) currently boasts robust prospects on strength in its businesses, solid product portfolio, acquisitions and growth investments.
Image Source: Zacks Investment Research
This Zacks Rank #2 (Buy) company has a market capitalization of $6.3 billion. In the past month, the stock has gained 4.4% compared with the industry’s growth of 4.2%.
Let’s delve into the factors that make investment in the company a smart decision at the moment.
Business Strength: Donaldson has been benefiting from its diversified business operations, with exposure in various geographies and end markets like construction, mining, aerospace, defense, and food & beverage. In the quarters ahead, the company is expected to benefit from its strong product portfolio, solid demand, focus on innovation and growth investments. Driven by solid segmental demand, its sales improved 18.2% year over year in second-quarter fiscal 2022 (ended January 2022), resulting in earnings growth of 9.6% from the year-ago quarter. The company’s Engine Products segment recorded a 19.8% increase in sales. Industrial Products’ sales expanded 14.6% year over year. Net sales are likely to increase 11-15% year over year in fiscal 2022 (ending July 2022), higher than 8-12% anticipated earlier.
Acquisition Benefits: The company intends to strengthen and expand its businesses through acquisitions. Its buyout of Solaris Biotechnology (in November 2021) has been strengthening its presence across several end markets, including food and beverage, biopharma and other major life sciences. The company also acquired Pearson Arnold Industrial Services in the same month.
Rewards to Shareholders: It remains committed to rewarding shareholders through dividend payouts and share buyback programs. For instance, in the first six months of fiscal 2022, Donaldson paid out dividends worth $54.6 million and repurchased shares worth $115.6 million. Further, it hiked its quarterly dividend rate by 4.8% in May 2021. The company expects free cash flow conversion of 70-80% and plans to buy back 2% of its outstanding shares for fiscal 2022.
Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for its fiscal 2022 (ending July 2022) earnings has moved up from $2.68 to $2.70 on three upward estimate revisions against none downward. Further, the consensus estimate for its fiscal 2023 (ending July 2023) earnings has increased from $2.97 to $3.03 on four upward estimate revisions versus none downward.
Other Stocks to Consider
Some other top-ranked companies from the Zacks Industrial Products sector are discussed below.
Alcoa Corporation (AA - Free Report) presently sports a Zacks Rank #1 (Strong Buy). Its earnings surprise in the last four quarters was 27.1%, on average.
You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, Alcoa’s earnings estimates have increased 86.5% for 2022. AA’s shares have gained 2.7% in the past month.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 14.2%, on average.
In the past 60 days, earnings estimates for Ferguson have increased 7% for fiscal 2022 (ending July 2022). Ferguson’s shares have declined 5.5% in the past month.
AGCO Corporation (AGCO - Free Report) presently carries a Zacks Rank #2. The company delivered a four-quarter earnings surprise of 56.7%, on average.
The earnings estimates for AGCO have increased 10.7% for 2022 in the past 60 days. Its shares have increased 18.9% in the past month.