Donaldson Company (DCI) is a filtration technology company with a global footprint. It serves a broad range of markets. The company operates through two segments, Industrial Products, and Engine Products.
Let’s take a look at the company’s latest financial performance, corporate developments, and changes in risk factors. (See Donaldson stock charts on TipRanks).
Q4 Financial Results and 2022 Outlook
Revenue for the fourth quarter of Fiscal 2021, ended July 31, increased 25.2% year-over-year to $773.1 million and exceeded the consensus estimate of $770.69 million. Engine Products sales increased 28.1%, while Industrial Products sales rose 19.5% year-over-year.
Donaldson posted EPS of $0.66, which met the consensus estimate and rose from $0.50 in the same quarter last year.
For Fiscal 2021, revenue increased 10.5% to $2.85 billion, and EPS rose to $2.24 from $2.00 in the previous year.
The company distributed $27.6 million in dividends and spent $63.5 million on share repurchases in Q4. Donaldson spent $249 million on dividends and share repurchases combined in the full year.
For Fiscal 2022, the company expects revenue to grow by between 5% and 10%. It anticipates EPS in the range of $2.50 – $2.66.
Corporate Developments
The company is in the process of restructuring its operations to improve operating and manufacturing costs, especially in the EMEA region. The company expects $8 million in annualized savings on completion of the restructuring by the start of the third quarter of Fiscal 2022.
Risk Factors
The new TipRanks Risk Factors tool now shows 20 risk factors for Donaldson, down from 22 previously. In its Fiscal 2021 annual report, the company updated its risk profile to remove two risk factors under the Macro and Political category.
It dropped a risk factor related to Brexit. It had cautioned investors that the U.K.’s decision to exit the E.U. could have a material adverse impact on its operations and finances.
Donaldson also removed the risk factor that said the demand for its products may be affected by changes in political, industrial, and economic conditions in the various markets it serves.
The majority of Donaldson’s risk factors fall under the Macro and Political category, with 25% of the total risks. That is above the sector average of 12%. Donaldson’s shares have gained about 8% since the beginning of 2021.
Analysts’ Take
Following Donaldson’s Q4 financial report, Morgan Stanley analyst Dillon Cumming reiterated a Buy rating on Donaldson stock but lowered the price target to $75 from $79. Cumming’s new price target suggests 24.65% upside potential.
Consensus among analysts is a Moderate Buy based on 2 Buys and 1 Hold. The average Donaldson price target of $74 implies 22.98% upside potential to current levels.
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