DONALDSON Co INC (DCI) stock analysis

P/E above its 5-year median

Donaldson's P/E of 22.8 is above its own 5-year median of 22.4.

P/E below the industry

Donaldson's P/E of 22.8 is below the General Industrial Machinery and Equipment median of 26.9.

EV/EBITDA above its 5-year median

Donaldson's EV/EBITDA of 15.9 is above its 5-year median of 14.8.

P/B above the industry

Donaldson's price-to-book of 5.77 is above the General Industrial Machinery and Equipment median of 2.84.

Trading above fair value

The share price of $87.85 is above our fair value estimate of $84.03.

Margin of safety under 20%

The price is 4.5% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 4.2% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 9.9% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 23.7% over the last twelve months, against a 5-year average of 9.6% a year.

Growing slower than the industry

Revenue grew 5.3% over the last twelve months; the General Industrial Machinery and Equipment median is 12.4%.

Guidance raised

Donaldson raised its full-year Life Sciences sales outlook on Jun 1, 2026.

Gross margin slipping

Gross margin was 34.6% over the last twelve months, against 34.8% a year earlier.

Return on equity over 15%

Return on equity was 28.2% over the last twelve months and averaged 28.2% over five years.

Return on capital over 10%

Return on invested capital was 19.4%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Donaldson's return on equity of 28.2% is above the General Industrial Machinery and Equipment median of 9.9%.

Earnings grew over 5 years

Net income grew 9.6% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 11.7% over the last twelve months, against a 5-year average of 10.7%.

Net margin above the industry

Donaldson's net margin of 11.7% is above the General Industrial Machinery and Equipment median of 8.0%.

High debt

Debt is 75.1% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 44.8% five years ago to 75.1%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 37.3% of total debt.

Interest well covered

Operating income covers interest expense 16.7 times.

Short-term assets cover short-term debts

Current assets are 2.08 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 5.51; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Donaldson paid dividends worth 1.4% of the share price over the last twelve months.

Yield below Treasuries

The 1.4% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Donaldson yields 1.4%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 31.1% of net income.

Covered by free cash flow

Dividends take 33.1% of free cash flow.