Donaldson Company (DCI) has sprung a leak as it has missed its last two earnings reports. Today it is a Zacks Rank #5 (Strong Sell), and is the Bear of the Day.
Filtering the Noise
The company provides filters for engines for both on and off road as well as the Aerospace and Defense Industry. The engine segment represents ~63% of the total sale while the industrial unit accounts for 37% of sales.
Donaldson Company is a worldwide manufacturer of filtration systems and replacement parts. The Company's product mix includes air and liquid filtration systems and exhaust and emission control products. The Company operates in two segments: Engine Products and Industrial Products
Two Misses And A Meet
It was back to the October 2012 quarter, if you are looking for the last time that the company posted a positive earnings surprise. Since that time there have been two negative earnings surprises and previous to the two misses there was a one earnings meet.
Projected Earnings Growth Drops
The Zacks Consensus Estimate has seen a decline over the past several month for 2013 and 2014. In January of 2013, the consensus stood at $1.77 but has trended lower to the current level of $1.61. That same can be said of 2014, with Estimate sliding from $1.98 to $1.83 over the same time horizons.
The valuation picture for DCI shows some mild premiums to the market, and at least one discount. The trailing PE of 23x is just below the 25x industry average. The Forward PE of 23x is slightly higher than the 20.6x industry average. The price to book is more than double the industry average while price to sales also come in high of the mark. For the most part, the premium given shares of DCI may not be warranted and other competitors might how more promise.
A quick look at the price and consensus shows that company has seen its estimates trend lower of late. While there was earnings growth in 2010-2012, 2013 has been challenging for this stock. There could be better plays if you are looking for filter exposure.
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