Donaldson Company (DCI)
NYSEIndustrialsIndustrial - MachinerySnapshot 2026-09-04
$91.03+0.47%
Close 2026-09-04 · 1-day change
NYSEIndustrialsIndustrial - MachinerySnapshot 2026-09-04
Intact: The reason to own it still holds.
Donaldson grows sales about 6% yearly, helped by the Facet acquisition. Profit margins aim for 16%, near recent levels. Free cash flow stays strong around 90%. The company is on track to set record sales and earnings in fiscal 2026.
Profit margin improvement lags, with Q2 at 15.6% below target. Sales growth could slow if acquisition benefits fade. Capital spending might rise, pressuring cash flow.
The price is about 7% above our fair value near $84, reflecting roughly 9% revenue growth expected by analysts. Our fair value is below the Street median, so the market is fairly valuing growth but may be optimistic on margins.
Breaks if: Capex exceeds $75M significantly in FY26
Maintain capital expenditures within $60 million to $75 million range for fiscal 2026 to support operational needs and growth.
Stated as a priority in 3 of last 3 quarters. Capital expenditures forecast consistently between $60M and $75M for fiscal 2026. Actual purchases of property, plant and equipment were $67.4M in 2026, within the forecast range, indicating delivery on this capital allocation priority.
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
DCI represents a durable compounder with a focus on achieving record sales and earnings per share. The current thesis state is stable, supported by recent financial performance and management's commitment to operational improvements.
The market currently prices DCI as cheap compared to its peers, with a low expectations gap. This suggests that investors may not be overly optimistic about future growth, allowing for potential upside if management delivers on its goals.
Fundamentals are likely to remain neutral in the near term, given the moderate risk and recent mixed performance. Management is on track with its priorities, but there is some caution due to past misses.
The thesis hinges on sector performance, particularly the results of key competitors like GEV, PH, and TT. If these companies continue to perform well, it could provide a favorable backdrop for DCI, while any negative guidance from them could pose risks.
The most important moves since the prior daily snapshot.
Mixed, the news cuts both ways. The latest earnings beat and raised outlook support growth objectives. However, a costlier bet may hinder margin improvement efforts.
as of 2026-09-04
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
“Capital expenditures are forecast to be between $60 million and $75 million”
“Capital expenditures are forecast to be between $60 million and $75 million”
“Capital expenditures are forecast to be between $60 million and $75 million”
Breaks if: Free cash flow yield falls below 3.5% in FY26
Maintain capital expenditures within $60 million to $75 million range for fiscal 2026 to support operational needs and growth.
Stated as a priority in 3 of last 3 quarters. Capital expenditures forecast consistently between $60M and $75M for fiscal 2026. Actual purchases of property, plant and equipment were $67.4M in 2026, within the forecast range, indicating delivery on this capital allocation priority.
“Capital expenditures are forecast to be between $60 million and $75 million”
“Capital expenditures are forecast to be between $60 million and $75 million”
“Capital expenditures are forecast to be between $60 million and $75 million”
Breaks if: Operating margin falls below 15.5% in FY26
Expand adjusted operating margin to between 15.8% and 16.2% in fiscal 2026 through operational improvements and Facet acquisition.
Stated as a priority in 3 of last 3 quarters. Operating margin improved from 13.4% in 2025 to 15.4% in 2026, with adjusted margin guidance narrowing to 15.8%-16.2%. Management has consistently emphasized margin expansion through operational improvements and Facet acquisition, showing progress but some guidance revisions indicate mixed trajectory.
“Adjusted 2026 operating margin expected between 15.8% and 16.2%, above fiscal 2025 adjusted margin of 15.7%”
“Adjusted 2026 operating margin expected between 16.0% and 16.4%, down from previous guidance”
“Adjusted 2026 operating margin expected between 16.2% and 16.8%, up from prior guidance”
Breaks if: YoY revenue growth falls below ~5.8% in FY26
Overall, DCI's fundamentals and management execution support a stable long-term view, but external sector factors will be crucial to monitor. Not investment advice.