Published on 23 May 2024 on Zacks via Yahoo Finance
Here's Why Investing in Donaldson (DCI) Stock Makes Sense Now
Donaldson Company, Inc. DCI is poised to gain from strength in the Industrial Solutions segment, acquired assets and shareholder-friendly moves.Let’s delve into the factors that make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.
Growth Catalysts
Business Strength: A diversified business structure with exposure in various geographies and end markets like construction, mining, aerospace, defense, and food & beverage is a boon for Donaldson. The Industrial Solutions segment is supported by continued strength in dust collection and power generation verticals within the industrial filtration solutions business. Increasing defense sales within the Aerospace and Defense business are also aiding the segment. The Mobile segment is benefiting from strength in aftermarket business while recovery in Disk Drive demand is boosting the Life Sciences segment.Accretive Acquisitions: DCI’s expansion initiative is expected to drive growth. In June 2023, the company acquired Univercells Technologies, thereby expanding its growing offering in the life sciences industry. Univercells will be added to Donaldson’s Life Sciences segment. The company acquired Isolere Bio in February 2023. The Isolere buyout enables Donaldson to create leading separation and filtration solutions for emerging genetic-based drugs and Isolere’s revenues are reported within the Donaldson Life Sciences segment.Rewards to Shareholders: Donaldson is committed to rewarding its shareholders handsomely through dividends and share buybacks. Dividend payments totaled $60.3 million in the first six months of fiscal 2024 (ended Jan 31, 2024). The company bought back shares worth $87.1 million in the first six months of the fiscal year. It is worth noting that the company’s quarterly dividend was hiked 8.7% in May 2023. Donaldson has raised its dividend for 27 consecutive years. In November 2023, the company’s board of directors approved a new repurchase program, authorizing the repurchase of up to 12 million shares of its common stock. The new repurchase program replaced the previous one, which was approved in 2019. For fiscal 2024, the company plans to buy back approximately 2% of its outstanding shares.Northward Estimate Revision: The Zacks Consensus Estimate for DCI’s fiscal 2024 (ending July 2024) earnings has been revised 1.9% upward in the past 60 days.Price Performance: Shares of DCIhave risen 19.4% in the past year, outperforming the industry’s 14.1% growth.