Results: Donaldson Company, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
It's been a good week for Donaldson Company, Inc. (NYSE:DCI) shareholders, because the company has just released its latest second-quarter results, and the shares gained 8.6% to US$72.52. Donaldson Company reported US$877m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.81 beat expectations, being 9.5% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Donaldson Company after the latest results.
See our latest analysis for Donaldson Company
Taking into account the latest results, the consensus forecast from Donaldson Company's eight analysts is for revenues of US$3.57b in 2024. This reflects a modest 2.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 4.7% to US$3.28. Before this earnings report, the analysts had been forecasting revenues of US$3.57b and earnings per share (EPS) of US$3.19 in 2024. So the consensus seems to have become somewhat more optimistic on Donaldson Company's earnings potential following these results.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 7.1% to US$70.00. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Donaldson Company analyst has a price target of US$77.00 per share, while the most pessimistic values it at US$59.00. This is a very narrow spread of estimates, implying either that Donaldson Company is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Donaldson Company's past performance and to peers in the same industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 5.3% growth on an annualised basis. That is in line with its 5.9% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 3.2% per year. So it's pretty clear that Donaldson Company is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Donaldson Company following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Donaldson Company going out to 2026, and you can see them free on our platform here.
It might also be worth considering whether Donaldson Company's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
