It has been about a month since the last earnings report for Donaldson Company, Inc. DCI. Shares have added about 6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Donaldson's Q4 Earnings Miss, Revenues Beat Estimates
Donaldson reported fourth-quarter fiscal 2017 adjusted earnings of 51 cents per share, which missed the Zacks Consensus Estimate of 53 cents by 3.8%. This ended the premium filtration products provider’s earning streak of three quarters. However, the bottom line was up 10.9% from the prior-year quarter figure of 46 cents.
For fiscal 2017, the company’s adjusted earnings per share rose 11.2% to $1.69 on a year-over-year basis. The bottom-line improvement can primarily be attributed to successful strategic initiatives and improving market conditions in Engine segment.
Quarter in Detail
Donaldson reported total sales of $660.1 million, up 11.2% on a year-over-year basis. Further, revenues surpassed the Zacks Consensus Estimate of $634.4 million comfortably. Impressive performance in Engine Products segment boosted the top line.
For fiscal 2017, Donaldson reported revenues of $2,371.9 million, up 6.8% from the prior-year figure.
Coming to the segments, Engine Products revenues increased 17.8% year over year in the fiscal fourth quarter to $ 431.9 million. Three of the four sub-segments under Engine Products — Off-Road, On Road and Aftermarket — recorded a jump in sales, which led to the overall strong performance. Sales in Aftermarket, On-road and Off-Road business increased by 19.1%, 4.4% and 28.3%, respectively. However, sales in Aerospace and Defense recorded a marginal decline of 0.1%.
Revenues at the Industrial Product segment were up 0.4% year over year to $228.2 million. Sales in Industrial Filtration Solutions and Special Applications business increased by 5.3% and 0.8%, respectively. However, sales in Gas Turbine Systems were down by 15.4%.
Donaldson’s fourth quarter adjusted operating margin declined to 14.3%, compared with its value of 15.8% recorded a year ago. Margins were negatively impacted by adverse sales mix, higher raw material costs and other charges. The company’s Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) came in at $116.2 million compared with $106.4 million recorded a year ago.