Analyst Note| Krzysztof Smalec, CFA |
There were no major surprises in Donaldson’s fiscal fourth-quarter earnings release, as sales and EPS both came in roughly in line with our expectations. Our prior fiscal 2022 EPS estimate of $2.60 was also within management’s guidance range for full-year fiscal 2022 GAAP EPS of $2.50 to $2.66. After rolling our model forward one year, we’ve bumped our fair value estimate for Donaldson to $55 from $54, as our revised forecast and time value of money were partially offset by the impact of a probability-weighted upward change in the U.S. statutory tax rate assumption in our model. We see shares as modestly overvalued at current levels, and we’d prefer to wait for a more attractive entry point before investing in the narrow moat-rated name.