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Here's Why It is Appropriate to Retain Donaldson (DCI) Now
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Donaldson Company, Inc. (DCI - Free Report) is well-positioned to benefit from solid momentum across its segments and acquired assets. The company’s measures to reward its shareholders are encouraging.
However, softness in off-road and on-road businesses is concerning for the company. Rising selling, general and administrative expenses, owing to increasing headcount and incremental expenses, are expected to weigh on its bottom line in the near term.
Shares of Donaldson have gained 9.8% in the year-to-date period. Let’s discuss the factors that should influence investors to retain this Zacks Rank #3 (Hold) company for the time being.
Image Source: Zacks Investment Research
Business Strength: Donaldson is benefiting from the strong performance of the Mobile Solutions, Industrial Solutions and Life Sciences segments. The Mobile Solutions segment is benefiting from strength in the aftermarket business driven by market share gains and pricing benefits.
The Industrial Solutions segment is supported by continued project wins and market share gains in dust collection and power generation verticals within the industrial filtration solutions business. Solid momentum in the aerospace and defense business, driven by strength in defense end markets, also augurs well for the segment. Strength in the bio-processing business, arising from an increase in lab-based applications and bio-reactor production, is boosting the Life Sciences segment. Solid momentum in the disk drive business is also aiding the segment.
Expansion Initiatives: The company solidified its product portfolio and leveraged business opportunities by adding assets. In June 2023, it acquired Univercells Technologies, thus expanding its growing offering in the life sciences industry. Univercells was added to Donaldson’s Life Sciences segment. The company acquired Isolere Bio in February 2023. The Isolere buyout enabled Donaldson to create leading separation and filtration solutions for emerging genetic-based drugs and Isolere’s revenues are reported within the Life Sciences segment.
Rewards to Shareholders: Donaldson is committed to rewarding its shareholders handsomely through dividends and share buybacks. Dividend payments totaled $90.3 million in the first nine months of fiscal 2024 (ended April 2024). It bought back shares worth $114 million in the first nine months of fiscal 2024. It is worth noting that the company’s quarterly dividend was hiked 8% in May 2024. It has raised its dividend for 28 consecutive years.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 0.9% in the past 60 days. The stock has risen 10.7% in the year-to-date period.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank #2 (Buy) and has a trailing four-quarter earnings surprise of 6.7%, on average.
The consensus estimate for BRC’s fiscal 2024 earnings has increased 1.4% in the past 60 days. Shares of Brady have gained 10.6% in the year-to-date period.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has increased 0.8% in the past 60 days. Its shares have gained 23.8% in the year-to-date period.
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Here's Why It is Appropriate to Retain Donaldson (DCI) Now
Donaldson Company, Inc. (DCI - Free Report) is well-positioned to benefit from solid momentum across its segments and acquired assets. The company’s measures to reward its shareholders are encouraging.
However, softness in off-road and on-road businesses is concerning for the company. Rising selling, general and administrative expenses, owing to increasing headcount and incremental expenses, are expected to weigh on its bottom line in the near term.
Shares of Donaldson have gained 9.8% in the year-to-date period. Let’s discuss the factors that should influence investors to retain this Zacks Rank #3 (Hold) company for the time being.
Image Source: Zacks Investment Research
Business Strength: Donaldson is benefiting from the strong performance of the Mobile Solutions, Industrial Solutions and Life Sciences segments. The Mobile Solutions segment is benefiting from strength in the aftermarket business driven by market share gains and pricing benefits.
The Industrial Solutions segment is supported by continued project wins and market share gains in dust collection and power generation verticals within the industrial filtration solutions business. Solid momentum in the aerospace and defense business, driven by strength in defense end markets, also augurs well for the segment. Strength in the bio-processing business, arising from an increase in lab-based applications and bio-reactor production, is boosting the Life Sciences segment. Solid momentum in the disk drive business is also aiding the segment.
Expansion Initiatives: The company solidified its product portfolio and leveraged business opportunities by adding assets. In June 2023, it acquired Univercells Technologies, thus expanding its growing offering in the life sciences industry. Univercells was added to Donaldson’s Life Sciences segment. The company acquired Isolere Bio in February 2023. The Isolere buyout enabled Donaldson to create leading separation and filtration solutions for emerging genetic-based drugs and Isolere’s revenues are reported within the Life Sciences segment.
Rewards to Shareholders: Donaldson is committed to rewarding its shareholders handsomely through dividends and share buybacks. Dividend payments totaled $90.3 million in the first nine months of fiscal 2024 (ended April 2024). It bought back shares worth $114 million in the first nine months of fiscal 2024. It is worth noting that the company’s quarterly dividend was hiked 8% in May 2024. It has raised its dividend for 28 consecutive years.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 8.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 0.9% in the past 60 days. The stock has risen 10.7% in the year-to-date period.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank #2 (Buy) and has a trailing four-quarter earnings surprise of 6.7%, on average.
The consensus estimate for BRC’s fiscal 2024 earnings has increased 1.4% in the past 60 days. Shares of Brady have gained 10.6% in the year-to-date period.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has increased 0.8% in the past 60 days. Its shares have gained 23.8% in the year-to-date period.