Donaldson (DCI) to Report Q3 Earnings: What's in the Cards?
Donaldson Company, Inc. DCI is scheduled to release third-quarter fiscal 2022 (ended April 2022) results on Jun 1.
The company’s earnings surpassed the Zacks Consensus Estimate twice in the last four quarters, while meeting and missing the same once each, the surprise being 4.16%, on average. Its second-quarter fiscal 2022 (ended January 2022) earnings of 57 cents per share lagged the Zacks Consensus Estimate of 62 cents by 8.06%.
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In the past three months, the company’s shares have lost 0.6% against the industry’s decline of 6.4%.
Factors at Play
Donaldson is expected to have benefited from strength across its off-road, aftermarket, and aerospace & defense end markets in the fiscal third quarter. While the company’s off-road business is likely to have benefited from higher equipment production levels, improved commercial aerospace market conditions are likely to have driven its aerospace business. Also, strength in its industrial filtration solutions, gas turbine systems and special applications businesses is likely to have boosted its performance.
Despite strength in end markets, supply chain challenges and logistics issues are expected to have adversely impacted DCI’s production capabilities, affecting its performance in the to-be-reported quarter. Escalating cost of sales and operating expenses has also been concerning for the company. In the fiscal second quarter, its cost of sales increased 21.8% year over year while operating expenses jumped 3.2%. In the quarter, the company’s gross margin declined 210 basis points on a year-over-year basis. High costs of raw materials, labor and freight, along with supply-chain challenges, are expected to have adversely impacted its margin and profitability in the to-be-reported quarter as well.
Given its extensive regional presence, Donaldson’s operations are subject to global economic and political risks, as well as forex woes. It is worth noting that in the fiscal second quarter, its On-Road sales decreased 14.1% year over year in the Europe, Middle East and Africa (EMEA) region. A stronger U.S. dollar might have hurt the company's overseas business in the fiscal third quarter.
The Zacks Consensus Estimate for Engine Products’ revenues for the fiscal third quarter is currently pegged at $579 million, indicating a 4.5% increase from the quarter-ago reported number. The consensus estimate for Industrial Products segment revenues is pegged at $252 million, indicating a sequential increase of 1.6%.
The Zacks Consensus Estimate for the company’s fiscal third-quarter total revenues is currently pegged at $831 million, suggesting 3.5% growth from the quarter-ago reported number. The consensus estimate for earnings of 72 cents suggests an improvement of 26.3% sequentially.
Earnings Whispers
According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. But that is not the case here, as we will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Donaldson has an Earnings ESP of 0.00%, as both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at 72 cents.
Donaldson Company, Inc. Price and EPS Surprise
Donaldson Company, Inc. price-eps-surprise | Donaldson Company, Inc. Quote
Zacks Rank: The company carries a Zacks Rank #4 (Sell).
Key Picks
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Allegheny Technologies Incorporated ATI has an Earnings ESP of +20.97% and a Zacks Rank of 1 at present. ATI delivered a trailing four-quarter earnings surprise of 128.94%, on average.
Earnings estimates of ATI have increased 27.3% for 2022 in the past 60 days. Its shares have gained 5.9% in the past three months.
Akoustis Technologies, Inc. AKTS has an Earnings ESP of +5.93% and a Zacks Rank of 2, currently. AKTS’ bottom line came in line with the consensus estimate in the last-reported quarter.
Earnings estimates of AKTS have increased 2% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have declined 32.6% in the past three months.
Argo Group International Holdings, Ltd. ARGO has an Earnings ESP of +4.35% and a Zacks Rank of 2, currently. Its earnings surprise in the last four quarters was 383.28%, on average.
In the past 60 days, ARGO’s earnings estimates have increased 0.2% for 2022. The stock has gained 0.8% in the past three months.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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