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Donaldson Co Inc DCI

Morningstar Rating
$73.78 +1.25 (1.72%)
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Company Report

Donaldson Aims to Spur Profitable Growth Through Investments in New Life Sciences Segment

Donaldson, a leading manufacturer of air and liquid filtration systems, has built a narrow moat around its large installed base of equipment coupled with a razor-and-blade business model that continues to generate a relatively steady and high-margin stream of recurring revenue from aftermarket parts and consumables. The firm generates an increasing portion of its sales from proprietary solutions, which enjoy higher margins and greater customer retention rates. As a result, recurring revenue has steadily increased, from roughly 50% in 2012 to over 60% in fiscal 2022. We expect this trend to continue, as the firm continues to scale their new life sciences segment both through organic investment and acquisitions.

Price vs Fair Value

DCI is trading within a range we consider fairly valued.
Price
$72.56
Fair Value
$55.00
Uncertainty
Medium
1-Star Price
$44.16
5-Star Price
$88.90
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Donaldson generates a healthy stream of recurring revenue, as aftermarket parts and consumables account for over 60% of sales, which helps mitigate the firm’s exposure to cyclical end markets.

Bears

In the long run, the advent of electric powertrains poses a threat to Donaldson’s engine segment.

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News

Trading Information

Previous Close Price
$72.53
Day Range
$72.3973.89
52-Week Range
$57.0778.05
Bid/Ask
$69.10 / $78.51
Market Cap
$8.88 Bil
Volume/Avg
145,362 / 556,516

Key Statistics

Price/Earnings (Normalized)
22.26
Price/Sales
2.52
Dividend Yield (Trailing)
1.41%
Dividend Yield (Forward)
1.49%
Total Yield
2.97%

Company Profile

Donaldson is a leading manufacturer of filtration systems and replacement parts (including air filtration systems, liquid filtration systems, and dust, fume, and mist collectors). The company serves a diverse range of end markets, including construction, mining, agriculture, truck, and industrial. Its business is organized into three segments: mobile solutions, industrial solutions, and life sciences. Donaldson generated approximately $3.4 billion in revenue and $480 million in operating income in its fiscal 2023.
Sector
Industrials
Industry
Specialty Industrial Machinery
Stock Style Box
Small Core
Total Number of Employees
13,000

Competitors

Valuation

Metric
DCI
NDSN
GGG
Price/Earnings (Normalized)
22.2625.2727.45
Price/Book Value
5.904.855.91
Price/Sales
2.525.146.55
Price/Cash Flow
17.8721.0121.88
Price/Earnings
DCI
NDSN
GGG

Financial Strength

Metric
DCI
NDSN
GGG
Quick Ratio
1.171.222.69
Current Ratio
1.912.214.11
Interest Coverage
25.448.52129.98
Quick Ratio
DCI
NDSN
GGG

Profitability

Metric
DCI
NDSN
GGG
Return on Assets (Normalized)
14.42%11.22%18.98%
Return on Equity (Normalized)
29.34%20.47%23.50%
Return on Invested Capital (Normalized)
20.98%14.65%22.73%
Return on Assets
DCI
NDSN
GGG
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