Donaldson Company

DCI

Industrial - Machinery · Industrials

Price

$90.40

-0.71 (-0.78%)

Market Cap

$10.48B

Winston Score

Winston is serious

Mixed quality — meaningful strengths and weaknesses.

Share count falling — buybacks

−6.1% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 128.2M (2021) → 120.4M (2025)

Donaldson Company makes filtration systems that remove dust, dirt, and other particles from air and liquids. Its products are used in heavy equipment like trucks, construction machines, and farm vehicles, as well as in factories, data centers, and industrial facilities. Founded in 1915 and headquartered in Minnesota, Donaldson is one of the largest independent filtration companies in the world.

The company earns money by selling both the filtration equipment itself and the replacement filters that customers must buy repeatedly over time — this aftermarket business provides steady, recurring revenue. Donaldson operates in over 40 countries, with significant sales across North America, Europe, and Asia, and generates roughly $3.5 billion in annual revenue. Its main competitive advantage is the large installed base of equipment that locks customers into buying proprietary replacement parts, though a slowdown in industrial production or heavy equipment demand is the key risk to watch.

Winston Score History

Politician Trades

2 trades / 12mo

0 Congressional buys and 2 sells on DCI in the last 12 months.

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Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+3.0% YoY

YoY Growth Rate

Slow revenue growth

EPS Growth

+0.0% YoY

YoY Growth Rate

Slow EPS growth

R&D Spend

$88M/ year

↓ Declining (-6% vs prior year)

2.4% of revenue

Below sector average (4%)

R&D spend declining — could signal cost-cutting or efficiency

Insider Activity

0.7%ownership

Relatively low insider ownership

Cash Position

Cash flow positive

$194M cash & investments

Quarterly Free Cash Flow

↓ Burn rate worsening

Company generates more cash than it spends — no dilution risk from fundraising

Growth context

Donaldson Company is growing revenue at 3% year-over-year. The Winston Score measures business quality today — these growth metrics show what could matter tomorrow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

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Quality

Gross Margin

33.4%

Modest — 33.4% gross margin

Operating Margin

13.2%

Healthy — 13.2% operating margin

ROCE

5.3%

Weak — 5.3% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales YoY

+0.3%

Nearly flat sales (0.3% YoY)

EPS YoY

-15.9%

Earnings shrinking (-15.9% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency

2/8 quarters

Earnings rarely grow — volatile business

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Cash Flow

Cash Conversion

105%

Turns 105% of profit into real cash

FCF Margin

8.4%

Modest free cash flow (8.4%)

FCF margin between 0% and 10%. Some cash from sales, but not a lot.

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Stability

Debt / Equity

0.43

Conservative — low debt load (0.43)

Interest Cover

18.31x

Comfortably covers interest (18.3x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

29.4x

Growth-priced — P/E 29.4

P/E above the market average. People are paying up for expected growth.

P/E vs Forward

+9.9

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (29.4 → 19.6)

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Dividends

Dividend Yield

1.43%

Small dividend — 1.43% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth

+9.9%

Dividend growing modestly (9.9% YoY)

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