A month has passed by because the final earnings report for Donaldson (DCI). Shares have added about 3.4% in that time-frame, outperforming the S&P 500.
Will the current constructive development proceed main as much as its subsequent earnings launch, or is Donaldson due for a pullback? Earlier than we dive into how traders and analysts have reacted as of late, let’s take a fast take a look at the latest earnings report with the intention to get a greater deal with on the essential drivers.
Donaldson This fall Earnings Prime Estimates & Revenues Miss
Donaldson reported fourth-quarter fiscal 2024 (ended July 31, 2024) adjusted earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate of 88 cents. The underside line elevated 20% yr over yr.
Income Outcomes
Whole revenues of $935.4 million missed the Zacks Consensus Estimate of $941 million. The highest line elevated 6.4% yr over yr (up 7.6% at fixed forex), pushed by quantity progress and the advantages of pricing actions.
Area-wise, Donaldson’s internet gross sales in america/Canada elevated 11.5% yr over yr. The metric fell 2.8% yr over yr in Europe, the Center East and Africa however elevated 19.5% in Latin America. Additionally, internet gross sales within the Asia Pacific improved 3.1%.
Donaldson reviews revenues underneath three segments, particularly Cellular Options, Industrial Options and Life Sciences.
A quick snapshot of segmental gross sales is supplied under.
The Cellular Options section’s (accounting for 61.5% of internet gross sales) gross sales had been $575.3 million, indicating a year-over-year rise of 6.1%. Outcomes benefited from a 12.6% enchancment in aftermarket gross sales. Nevertheless, gross sales fell 13% in Off-Street and 11.8% in On-Street companies in the course of the quarter.
Revenues generated from the Industrial Options section (30.8%) had been $287.8 million, up 3.9% yr over yr. Outcomes benefited from gross sales progress of 39.7% in Aerospace and Protection companies.
Revenues generated from the Life Sciences section (7.7%) had been $72.3 million, up 20.7% yr over yr. The outcomes benefited from quantity progress in Disk Drive and Meals and Beverage companies.
Donaldson’s Margin Profile
Within the fiscal fourth quarter, Donaldson’s value of gross sales elevated 3.7% yr over yr to $600.6 million. Gross revenue jumped 11.6% to $334.8 million. The gross margin elevated 170 foundation factors (bps) to 35.8% on the again of upper gross sales and deflation in enter prices.
Working bills rose 5% yr over yr to $188.6 million. Working revenue elevated 21.4% to $146.2 million. The working margin was 15.6%, up 190 bps yr over yr.
The efficient tax price was 21.3% in contrast with 21.7% within the year-ago quarter.
Steadiness Sheet & Money Stream
Exiting the fiscal fourth quarter, Donaldson’s money and money equivalents had been $232.7 million in contrast with $187.1 million within the fourth quarter of fiscal 2023. Lengthy-term debt was $483.4 million in contrast with $496.6 million within the fourth quarter of fiscal 2023.
In fiscal 2024, the corporate generated internet money of $492.5 million from working actions, indicating a lower of 9.6% yr over yr. Capital expenditure (internet) totaled $85.6 million in contrast with $118.5 million within the year-ago fiscal interval. Free money circulation decreased 4.3% to $407.6 million. In the identical time-frame, administration repaid its long-term debt of $228.8 million.
It additionally used $162.7 million to repurchase shares and $122.8 million to pay out dividends throughout fiscal 2024.
Donaldson’s FY24 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 stage. Optimistic pricing is projected to have an accretive impression of 1%.
On a segmental foundation, Cellular Options’ gross sales are anticipated to be flat to extend 4% from the fiscal 2024 stage. Industrial Options’ gross sales are envisioned to leap within the vary of 4-8% from the fiscal 2024 determine. The corporate forecasts its Life Sciences section’s gross sales to extend within the low-double-digit vary.
Curiosity bills are predicted to be roughly $21 million whereas different earnings is projected to be within the vary of $16-$20 million. The efficient tax price is anticipated to be between 23% and 25%.
Capital expenditure is predicted to be between $85 million and $105 million. Free money circulation conversion is anticipated to be within the vary of 85-95%. Share buybacks are anticipated to account for 2-3% of the excellent shares.
How Have Estimates Been Transferring Since Then?
It seems, estimates revision have trended downward in the course of the previous month.
VGM Scores
At present, Donaldson has a powerful Development Rating of A, although it’s lagging quite a bit on the Momentum Rating entrance with an F. Nevertheless, the inventory was allotted a grade of B on the worth aspect, placing it within the high 40% for this funding technique.
Total, the inventory has an mixture VGM Rating of B. In case you aren’t centered on one technique, this rating is the one you have to be taken with.
Outlook
Estimates have been broadly trending downward for the inventory, and the magnitude of those revisions signifies a downward shift. It is no shock Donaldson has a Zacks Rank #4 (Promote). We count on a under common 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.
