Donaldson Company, Inc. (DCI) delivered a solid first-quarter performance on Thursday that had analysts reaching for their spreadsheets to update their forecasts.
The industrial filtration company reported sales of $935.4 million for the first quarter of fiscal 2026, up 3.9% from the prior year and beating the $922.9 million consensus estimate. What drove the beat? Favorable currency translation and volume growth, according to the company. GAAP net earnings jumped to $113.9 million (97 cents per share) from $99.0 million (81 cents per share) a year earlier. On an adjusted basis, earnings per share hit 94 cents, edging past the 92-cent consensus.
The results were strong enough that Donaldson lifted its full-year guidance. The company now expects fiscal 2026 adjusted EPS of $3.95 to $4.11, up from the previous range of $3.92 to $4.08 and right in line with the consensus estimate of $4.01. Sales growth guidance also got a bump, with the company now projecting year-over-year growth of 1% to 5%, compared to earlier guidance of 1% to 3%. About one percentage point of that growth should come from pricing benefits.
Chairman, President, and CEO Tod Carpenter sounded pretty pleased with how the company navigated a tricky environment. "In the face of a dynamic macro landscape, and consistent with the value created by our robust portfolio of businesses and product offerings, we gained market share in key businesses and grew replacement part sales through our razor-to-sell-razorblades model," he said. "Combined with ongoing expense management, we converted sales growth of 4% into 13% adjusted EPS growth."
That's the kind of operating leverage investors like to see—modest top-line growth turning into double-digit earnings growth.
Despite the solid quarter, Donaldson shares slipped 1.8% to trade at $92.16 on Friday. But analysts were clearly impressed. Baird analyst Richard Eastman maintained his Outperform rating and raised his price target from $96 to $100. Meanwhile, Stifel analyst Adam Farley kept his Hold rating but boosted his target from $90 to $96.
