U.S. markets open in 6 hours 40 minutes
  • S&P Futures

    3,427.75
    -24.00 (-0.70%)
     
  • Dow Futures

    27,988.00
    -201.00 (-0.71%)
     
  • Nasdaq Futures

    11,604.25
    -59.25 (-0.51%)
     
  • Russell 2000 Futures

    1,618.60
    -17.00 (-1.04%)
     
  • Crude Oil

    38.93
    -0.92 (-2.31%)
     
  • Gold

    1,899.50
    -5.70 (-0.30%)
     
  • Silver

    24.28
    -0.39 (-1.60%)
     
  • EUR/USD

    1.1839
    -0.0030 (-0.25%)
     
  • 10-Yr Bond

    0.8410
    0.0000 (0.00%)
     
  • Vix

    27.55
    -0.56 (-1.99%)
     
  • GBP/USD

    1.3025
    -0.0014 (-0.10%)
     
  • USD/JPY

    104.8800
    +0.1900 (+0.18%)
     
  • BTC-USD

    13,092.41
    +15.39 (+0.12%)
     
  • CMC Crypto 200

    262.87
    +1.41 (+0.54%)
     
  • FTSE 100

    5,860.28
    +74.63 (+1.29%)
     
  • Nikkei 225

    23,494.34
    -22.25 (-0.09%)
     

Donaldson Company, Inc.'s (NYSE:DCI) Earnings Dropped -14%, How Did It Fare Against The Industry?

Simply Wall St
·3 mins read

Examining Donaldson Company, Inc.'s (NYSE:DCI) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess DCI's latest performance announced on 31 January 2020 and compare these figures to its longer term trend and industry movements.

View our latest analysis for Donaldson Company

Was DCI's recent earnings decline worse than the long-term trend and the industry?

DCI's trailing twelve-month earnings (from 31 January 2020) of US$263m has declined by -14% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 5.2%, indicating the rate at which DCI is growing has slowed down. Why is this? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is facing the same headwind.

NYSE:DCI Income Statement May 20th 2020
NYSE:DCI Income Statement May 20th 2020

In terms of returns from investment, Donaldson Company has invested its equity funds well leading to a 28% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 12% exceeds the US Machinery industry of 6.2%, indicating Donaldson Company has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Donaldson Company’s debt level, has declined over the past 3 years from 25% to 21%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 68% to 72% over the past 5 years.

What does this mean?

Donaldson Company's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors affecting its business. I recommend you continue to research Donaldson Company to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for DCI’s future growth? Take a look at our free research report of analyst consensus for DCI’s outlook.

  2. Financial Health: Are DCI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 January 2020. This may not be consistent with full year annual report figures.

Love or hate this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.