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1. Company Snapshot

1.a. Company Description

Donaldson Company, Inc.manufactures and sells filtration systems and replacement parts worldwide.The company operates through two segments, Engine Products and Industrial Products.


Its Engine Products segment provides replacement filters for air and liquid filtration applications; air filtration systems; liquid filtration systems for fuel, lube, and hydraulic applications; exhaust and emissions systems and sensors; indicators; and monitoring systems.This segment sells its products to original equipment manufacturers (OEMs) in the construction, mining, agriculture, aerospace, defense, and transportation markets; and to independent distributors, OEM dealer networks, private label accounts, and large fleets.The company's Industrial Products segment offers dust, fume, and mist collectors; compressed air purification systems; gas and liquid filtration for food, beverage, and industrial processes; air filtration systems for gas turbines; polytetrafluoroethylene membrane-based products; and specialized air and gas filtration systems for applications, including hard disk drives, semi-conductor manufacturing and sensors, indicators, and monitoring systems.


This segment sells its products to various dealers, distributors, OEMs of gas-fired turbines, and OEMs and end-users requiring air filtration solutions and replacement filters.Donaldson Company, Inc.was founded in 1915 and is headquartered in Bloomington, Minnesota.

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1.b. Last Insights on DCI

Breaking News: Donaldson Company Inc reported Q1 earnings on December 4 2025. The company posted earnings of $0.94 per share beating the Zacks Consensus Estimate of $0.93 per share. This represents a year-over-year increase from $0.83 per share. Revenue and EPS exceeded Wall Street estimates. The company's Q1 performance appears strong. Zacks analyst recommends a hold. Other analysts at Deutsche Bank and Wells Fargo have a hold and a buy rating respectively. RBC Capital Markets give a sector perform rating.

1.c. Company Highlights

2. Donaldson Company Delivers Record FY2025 with Strong Q4 Earnings

Donaldson Company's Q4 FY2025 earnings report was a resounding success, with sales increasing 5% year-over-year to $981 million, adjusted EPS up 10% to $1.03, beating analyst estimates of $1.02. The company's operating profit margin expanded to 15.7% for the full year, driven by progress on footprint optimization and cost structure. The strong EPS performance was a testament to the company's ability to drive growth through its create, connect, replace service model, particularly in the industrial solutions segment, where sales grew double digits. The company's life sciences segment also saw significant growth, with sales up over 20% in new and replacement parts.

Publication Date: Aug -29

📋 Highlights
  • Record FY 2025 Performance:: Sales reached $3.7B, operating margin expanded to 15.7%, EPS of $3.68, and $465M returned to shareholders.
  • Q4 FY 2025 Growth:: Sales rose 5% YoY to $981M, adjusted EPS increased 10% to $1.03, with progress in cost optimization.
  • Segment Profitability:: Mobile Solutions (19.1%), Industrial Solutions (20.9%), and Life Sciences (5.3% improvement) achieved record/strong margins.
  • FY 2026 Outlook:: $3.8B sales, 16.4% operating margin, $4 EPS forecast, driven by pricing, margin expansion, and 1-5% sales growth.
  • Connected Products Growth:: 30% expected increase in dust collection connected products, enhancing customer retention and replacement sales.

Segment Performance

The company's segments performed well, with mobile solutions pretax profit margin at a record 19.1%, industrial solutions pretax margin at a record 20.9%, and life sciences pretax margin improving to 5.3%. The industrial segment is seeing a strong replacement part story, with the US and Europe holding strong, while APAC and LATAM are more troubled. The life sciences segment is also performing well, driven by traditional businesses, but bioprocessing solutions have been delayed and are expected to reach breakeven EBIT in fiscal 2027.

Outlook and Guidance

The company is forecasting a record year in FY2026, with total sales of $3.8 billion, an all-time high operating margin of 16.4%, and record earnings of $4 per share. The guidance includes sales growth between 1-5%, pricing of approximately 1%, and operating margin expansion. The company expects to deliver higher levels of profitability on higher sales, driven by gross margin expansion, expense leverage, and structural cost reductions.

Valuation and Returns

Using the current stock price and FY2025 EPS of $3.68, the P/E Ratio is 25.29, indicating a relatively high valuation. However, the company's ROE of 24.45% and ROIC of 16.41% suggest strong returns on equity and invested capital. The dividend yield is 1.43%, providing a relatively stable source of return. With a P/S Ratio of 2.52 and EV/EBITDA of 15.86, the company's valuation multiples are reasonable, considering its growth prospects and profitability.

Capital Allocation and M&A

The company's capital allocation priorities include organic growth, M&A, dividends, and share buybacks, with a strong balance sheet allowing for M&A activities. The M&A pipeline is active, and the company has an appetite for buybacks beyond the 2% to 3% shares outstanding. The company's commitment to investing in organic growth opportunities and potential benefits from OBVBA or other assessments is evident in its CapEx guidance, which implies a decline year-over-year at the midpoint, driven by prioritization and uncertainty.

3. NewsRoom

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Donaldson Company, Inc. (DCI) Q1 2026 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

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Donaldson (DCI) Q1 Earnings: How Key Metrics Compare to Wall Street Estimates

Dec -04

Source: zacks.com

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Donaldson (DCI) Surpasses Q1 Earnings and Revenue Estimates

Dec -04

Source: zacks.com

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What Analyst Projections for Key Metrics Reveal About Donaldson (DCI) Q1 Earnings

Dec -01

Source: zacks.com

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Capital Counsel LLC NY Sells 3,796 Shares of Donaldson Company, Inc. $DCI

Dec -01

Source: defenseworld.net

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34,860 Shares in Donaldson Company, Inc. $DCI Acquired by Ballast Asset Management LP

Dec -01

Source: defenseworld.net

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Donaldson Company: Evaluating a Strong Contender in the Stock Market

Nov -27

Source: fool.com

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Donaldson (NYSE:DCI) Reaches New 12-Month High Following Dividend Announcement

Nov -25

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.57%)

6. Segments

Mobile Solutions

Expected Growth: 5.5%

Donaldson's Mobile Solutions segment growth of 5.5% is driven by increasing adoption of clean air and fuel filtration systems in the automotive and industrial markets, coupled with rising demand for efficient filtration solutions in the oil and gas industry. Additionally, the company's strategic investments in digital technologies and expansion into emerging markets are contributing to the segment's growth.

Industrial Solutions

Expected Growth: 5.8%

Donaldson's Industrial Solutions segment growth of 5.8% is driven by increasing demand for filtration solutions in industrial processes, expansion in emerging markets, and strategic acquisitions. Additionally, the segment benefits from the company's focus on innovation, product diversification, and strong customer relationships, leading to market share gains and revenue growth.

Life Sciences

Expected Growth: 5.2%

Donaldson's Life Sciences segment growth of 5.2% is driven by increasing demand for bioprocessing and pharmaceutical products, expansion in emerging markets, and strategic acquisitions. Additionally, the company's innovative filtration solutions and strong relationships with key customers contribute to its growth momentum.

7. Detailed Products

Air Filtration Products

Donaldson's air filtration products are designed to capture contaminants and pollutants from the air, providing clean air for various industries such as industrial, commercial, and residential applications.

Liquid Filtration Products

Donaldson's liquid filtration products are designed to remove contaminants and impurities from liquids, providing clean fluids for various industries such as oil and gas, chemical processing, and power generation.

Gas Turbine Filtration Products

Donaldson's gas turbine filtration products are designed to provide clean air for gas turbines, improving efficiency and reducing downtime.

Dust Collection Products

Donaldson's dust collection products are designed to capture dust and other airborne contaminants, providing a cleaner and safer work environment.

Hydraulic Filtration Products

Donaldson's hydraulic filtration products are designed to remove contaminants and impurities from hydraulic fluids, improving system performance and reducing downtime.

Process Filtration Products

Donaldson's process filtration products are designed to remove contaminants and impurities from process fluids, improving product quality and reducing waste.

8. Donaldson Company, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Donaldson Company, Inc. is medium due to the availability of alternative products in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the presence of large and established customers who can negotiate prices and terms.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's ability to negotiate prices and terms with its suppliers.

Threat Of New Entrants

The threat of new entrants is medium due to the moderate barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established competitors in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.18%
Debt Cost 3.95%
Equity Weight 66.82%
Equity Cost 9.39%
WACC 7.58%
Leverage 49.65%

11. Quality Control: Donaldson Company, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Watts Water Technologies

A-Score: 5.9/10

Value: 2.4

Growth: 6.9

Quality: 8.0

Yield: 1.0

Momentum: 8.0

Volatility: 9.0

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Donaldson

A-Score: 5.6/10

Value: 2.6

Growth: 5.8

Quality: 6.7

Yield: 2.0

Momentum: 7.0

Volatility: 9.3

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A O Smith

A-Score: 5.6/10

Value: 3.9

Growth: 5.8

Quality: 8.0

Yield: 4.0

Momentum: 3.0

Volatility: 8.7

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Value: 2.4

Growth: 6.7

Quality: 7.2

Yield: 2.0

Momentum: 7.0

Volatility: 7.3

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CSW Industrials

A-Score: 4.9/10

Value: 2.4

Growth: 8.2

Quality: 7.9

Yield: 0.0

Momentum: 2.0

Volatility: 8.7

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Nordson

A-Score: 4.7/10

Value: 2.4

Growth: 5.0

Quality: 6.8

Yield: 2.0

Momentum: 3.0

Volatility: 8.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

92.17$

Current Price

92.17$

Potential

-0.00%

Expected Cash-Flows