Donaldson Company Inc (NYSE:DCI) is a mid cap company that operates within the machinery industry. Its market cap is $7 billion today, and the total one-year return is 26.84% for shareholders.
Donaldson stock is beating the market, and it reports earnings soon. But does that make it a good buy today? To answer this question, we've turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics...
✗ Earnings-per-Share (EPS) Growth: Donaldson reported a recent EPS growth rate of 9.76%. That's below the machinery industry average of 150.97%. That's not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the machinery industry is 39.09. And Donaldson's ratio comes in at 28.62. It's trading at a better value than many of its competitors.
✗ Debt-to-Equity : The debt-to-equity ratio for Donaldson stock is 75.44%. That's above the machinery industry average of 69.33%. That's not a good sign. Donaldson's debt levels should be lower.
✗ Free Cash Flow per Share Growth : Donaldson's FCF has been lower than that of its competitors over the last year. That's not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It's one of our most important fundamental factors.
✓ Profit Margins : The profit margin of Donaldson comes in at 9.88% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Donaldson's profit margin is above the machinery average of 8.89%. So that's a positive indicator for investors.
✓ Return on Equity : Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Donaldson is 28.06%, and that's above its industry average ROE of 16.19%.
Donaldson stock passes three of our six key metrics today. That's why our Investment U Stock Grader rates it as a Hold.