Donaldson Company (DNZ) AI Stock Analysis

Company Guidance

For fiscal 2027 Donaldson guided to total sales growth of 5.5%–9.5% (midpoint implying record sales above $4.1B and roughly +7.5% y/y), with Facet and pricing each contributing ~2 percentage points and currency about 1pp; segment outlooks were Mobile +2%–6% (off‑road mid‑single digits, on‑road high‑single digits, aftermarket mid‑single digits), Industrial total mid‑teens (about half of that from Facet) with IFS organic mid‑single digits and Aerospace & Defense >50% (organic mid‑teens), and Life Sciences +7%–11%. Profitability was guided to operating margin of 16.6%–17.2% (midpoint ≈ +90 bps), EPS $4.22–$4.38 (midpoint ≈ $4.30, ~8% y/y, including ≈$0.12 of Facet dilution), gross‑margin tailwinds offset by Facet run‑rate expenses and amortization (~$22M), and interest expense of $55–$60M (vs $36M prior year). Cash and capital priorities include capex $70–$90M, free cash conversion ~95%–105%, net leverage ~1.4x EBITDA after >$100M of Facet debt paydown, resumption of buybacks of ~1% of shares, continued dividend increases, and disciplined M&A; seasonality was noted with ~52% of sales and ~57% of operating profit expected in the second half.