A month has passed by for the reason that final earnings report for Donaldson (DCI). Shares have misplaced about 8.2% in that time-frame, underperforming the S&P 500.
Will the latest destructive development proceed main as much as its subsequent earnings launch, or is Donaldson due for a breakout? Earlier than we dive into how buyers and analysts have reacted as of late, let’s take a fast have a look at its most up-to-date earnings report with a view to get a greater deal with on the essential drivers.
Donaldson’s Q1 Earnings Surpass Estimates, Gross sales Rise 12 months Over 12 months
Donaldson reported first-quarter fiscal 2025 (ended Oct. 31, 2024) adjusted earnings of 83 cents per share, which surpassed the Zacks Consensus Estimate of 82 cents. The underside line elevated 10.7% yr over yr.
Income Outcomes
Whole revenues of $900.1 million beat the Zacks Consensus Estimate of $891 million. The highest line elevated 6.4% yr over yr (up 5% at fixed forex), pushed by power in aftermarket arising from market share positive factors and buyer destocking.
Area-wise, Donaldson’s web gross sales in the USA/Canada elevated 7% yr over yr. The metric elevated 5% yr over yr in Europe, the Center East and Africa and 6% in Latin America. Additionally, web gross sales within the Asia Pacific improved 7%.
Donaldson studies revenues below three segments, specifically Cell Options, Industrial Options and Life Sciences.
A short snapshot of segmental gross sales is offered under.
The Cell Options phase’s (accounting for 63.6% of web gross sales) gross sales have been $572.4 million, indicating a year-over-year rise of 6%. Outcomes benefited from a ten.7% enchancment in aftermarket gross sales. Nevertheless, gross sales fell 5.9% in Off-Highway and 15% in On-Highway companies through the quarter.
Revenues generated from the Industrial Options phase (28.6%) have been $257.6 million, up 4.6% yr over yr. Outcomes benefited from gross sales progress of 26.8% in Aerospace and Protection companies.
Revenues generated from the Life Sciences phase (7.8%) have been $70.1 million, up 16.6% yr over yr. The outcomes benefited from quantity progress in Disk Drive and Meals and Beverage companies.
Donaldson’s Margin Profile
Within the fiscal first quarter, Donaldson’s price of gross sales inched up 6.4% yr over yr to $580.5 million. Gross revenue jumped 6.2% to $319.6 million. The gross margin decreased 10 foundation factors (bps) to 35.5% because of greater prices.
Working bills rose 7.1% yr over yr to $188.8 million. Working revenue elevated 4.9% to $130.8 million. The working margin was 14.5%, up 20 bps yr over yr.
The efficient tax fee was 24.2% in contrast with 25.1% within the year-ago quarter.
Stability Sheet & Money Movement
Exiting the fiscal first quarter, Donaldson’s money and money equivalents have been $221.2 million in contrast with $232.7 million within the fourth quarter of fiscal 2024. Lengthy-term debt was $538.6 million in contrast with $483.4 million within the fourth quarter of fiscal 2024.
Within the first three months of fiscal 2025, the corporate generated web money of $72.9 million from working actions, indicating a lower of 47.2% yr over yr. Capital expenditure (web) totaled $25.0 million in contrast with $23.2 million within the year-ago fiscal interval. Free money movement decreased 58.3% to $47.9 million. In the identical time-frame, administration didn’t repay any long-term debt.
It used $74.4 million to repurchase shares and $32.4 million to pay out dividends through the first three months of fiscal 2025.
Donaldson’s FY25 Outlook
For fiscal 2025 (ending July 2025), Donaldson expects adjusted earnings per share to be within the vary of $3.56-$3.72 in contrast with $3.42 in fiscal 2024. Gross sales are anticipated to extend within the 2-6% band from the fiscal 2024 degree. Optimistic pricing is projected to have an accretive impression of 1%.
On a segmental foundation, Cell Options’ gross sales are anticipated to be flat to extend 4% from the fiscal 2024 degree. Industrial Options’ gross sales are envisioned to leap within the vary of 4-8% from the year-ago determine. The corporate forecasts its Life Sciences phase’s gross sales to extend within the low-double-digit vary.
Curiosity bills are predicted to be roughly $21 million whereas different revenue is projected to be within the vary of $16-$20 million. The efficient tax fee is anticipated to be between 23% and 25%.
Capital expenditure is anticipated to be between $85 million and $105 million. Free money movement conversion is anticipated to be within the vary of 85-95%.
How Have Estimates Been Shifting Since Then?
Prior to now month, buyers have witnessed a downward development in estimates assessment.
VGM Scores
Presently, Donaldson has a pleasant Progress Rating of B, a grade with the identical rating on the momentum entrance. Following the very same course, the inventory was allotted a grade of B on the worth facet, placing it within the second quintile for this funding technique.
General, the inventory has an mixture VGM Rating of A. In the event you aren’t centered on one technique, this rating is the one you ought to be fascinated with.
Outlook
Estimates have been broadly trending downward for the inventory, and the magnitude of those revisions signifies a downward shift. Notably, Donaldson has a Zacks Rank #3 (Maintain). We anticipate an in-line return from the inventory within the subsequent few months.
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Donaldson Company, Inc. (DCI) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
