Donaldson Earnings Preview: Strong Sales Results Expected

Donaldson DCI is scheduled to report fiscal third-quarter 2011 results before the opening bell on Friday, May 20. Analysts expect the Minneapolis-based manufacturer to announce that earnings came to $0.72 per share. The consensus estimate is unchanged from 60 days ago, but up from per-share earnings of $0.65 in the same period of last year. Note that earnings results were better than expected in four of the past five quarters. Donaldson manufactures and sells filtration systems and replacement parts worldwide. Its Engine Products segment offers air filtration systems, exhaust and emissions systems and liquid filtration systems to the construction, mining, agriculture, aerospace, defense and truck markets. The Industrial Products segment provides dust and fume collectors, compressed air purification systems, liquid filtration systems, air filtration systems for gas turbines and specialized air filtration systems and replacement parts. During the three months that ended in April, Donaldson announced plans to build a manufacturing facility in Mexico. The company also said it expects full-year sales in its engine product segment to grow by 21% to 26%, helped by higher sales of construction, agricultural and mining equipment. The revenue forecast for the third quarter calls for $581.4 million, which is an increase of 16.8% from the same period of last year. The company has a long-term earnings per share growth forecast of 13.1%, a dividend yield of 0.8% and a return on equity of 23.3%. Shares are trading about 4% lower than the recent 52-week high of $62.90. The stock has outperformed the broader markets, as well as competitors MFRI MFRI and Pall Corp. PLL, year to date.