Donaldson Rolls Out New Rating System For Its Turbo Filters

Donaldson Company, Inc. (NYSE:DCI) recently developed a more efficient and easier approach for the gas turbine system operators to select the suitable replacement air filters. Henceforth, each of the company’s Turbo-Tek Cartridge Filters will be fitted with a unique rating system that will aid in the filter selection process.

Inside the Headlines

Notably, the gas turbine inlet air filter selection process is extremely confusing and complex owing to the abundance of industry ratings. However, Donaldson’s newfangled rating system is likely to alleviate the issue going forward. It is an unique 0-5 point rating scale that gauges watertightness (W), efficiency (Er) and pulse recovery rate (P) for all types of its Turbo-Tek Cartridge Filters.

Er will be representing the percentage of particulates confined from incoming air. W rating will indicate the filter’s water ingress resistance capacity. Meanwhile, the P rating will show how readily the peak recital returns post pulse cleaning a dust load.

The company’s rating system was prepared after several laboratory tests and aids in quantifying pulse recovery rate and watertightness of the filters, in turn making selection easier for the operators. Donaldson noted that the operators will be able to power their gas turbine system’s more cost effectively driven by the convenience of the filter selection process.

Our Take

Strength in major businesses (like Aerospace and Defence, Filtration Solutions and Special Applications), strategic innovation investments, ongoing pricing initiatives and diligent cost cutting moves is likely to bolster Donaldson’s near-term competency. Over the past month, this Zacks Rank #3 (Hold) has rallied 5.8%, outperforming 1.4% growth recorded by the industry it belongs to.

However, material price inflation (on account of tariffs imposed over certain U.S. imports) and flaring up freight charges are both predicted to hurt the company’s gross profit by nearly $30 million in fiscal 2019 (ending July 2019). Further, weakening Gas Turbine Systems business remains a major cause of concern. The aforementioned rating system introduction might give a boost to this business but scarcity of large turbine projects might continue to weigh on performance going forward.

Stocks to Consider

Some better-ranked stocks within the Zacks Industrial Products sector are listed below:

ARC Document Solutions, Inc. (NYSE:ARC) sports a Zacks Rank #1 (Strong Buy). The company has pulled off a positive average earnings surprise of 133.33% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Energy Recovery, Inc. (NASDAQ:ERII) carries a Zacks Rank #2 (Buy). The company has delivered a positive average earnings surprise of 204.17% in the past four quarters.

Applied Industrial Technologies, Inc. (NYSE:AIT) also carries a Zacks Rank of 2. The company has recorded a positive average earnings surprise of 11.67% in the past four quarters.

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