Why Is Filtration Company Donaldson Stock Jumping Premarket Today?

Donaldson Company, Inc. DCI shares are trading higher after the company reported third-quarter FY24 results and raised EPS guidance.

Sales increased 6.0% Y/Y to $927.9 million beating the consensus of $915.8 million, led by higher volume growth and pricing benefits.

By Segment, Mobile Solutions sales surged 5.5% Y/Y and Industrial Solutions sales grew 2.9% Y/Y, aided by higher volumes and pricing.

Life Sciences segment sales increased 24.2% Y/Y, led by strong volume growth from Bioprocessing Equipment sales timing and Disk Drive.

Gross margin expanded 260 basis points Y/Y to 35.6% on higher sales, pricing benefits and, input cost deflation.

Adjusted EPS rose 21.7% Y/Y to $0.92, beating the consensus of $0.83.

Year-to-date, Donaldson paid $90.3 million in dividends and repurchased shares worth $114.0 million.

Last week, the Board of Directors declared a cash dividend per share of 27.0 cents, an increase of 8.0% from the prior quarterly dividend, payable June 28, 2024, to shareholders of record on June 17, 2024.

Tod Carpenter, chairman, president, and chief executive officer, said, “Despite mixed end-market conditions, we maintained focus on our customers and delivered our technology-led filtration products and services across our diversified portfolio of businesses.”

“Looking ahead, we remain committed to returning value to our shareholders through the execution of our longer-term strategic initiatives and continued progress towards our fiscal 2026 Investor Day targets.”

FY24 Outlook: Donaldson raises EPS forecast to $3.33-$3.39 (vs. consensus of $3.27) from $3.24-$3.32.

The company now anticipates sales growth of 4%-6% Y/Y (vs. 3%-7% earlier), with a pricing benefit of around 2% and a negligible impact from currency translation. Donaldson projects mobile sales growth to be 2%-4% (prior view 1%-5%) for FY24. 

For the full year, Donaldson anticipates repurchasing approximately 2% of its shares outstanding.

Investors can gain exposure to the stock via VanEck Environmental Services ETF EVX and VanEck Green Infrastructure ETF RNEW.

Price Action: DCI shares are up 5.63% at $76.00 premarket at the last check Tuesday.

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