DCI - Embedded Expectations Analysis - 2020 06 12
Donaldson Company, Inc. (DCI:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 28.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about sales declines, gross margin improvement initiatives, and capacity constraintsSpecifically, management may have concerns about continued sales declines from their construction, mining, and agriculture customers and weakness in their Gas Turbine Systems (GTS), Industrial Filtration Solutions (IFS), and China segments. In addition, they may lack confidence in their ability to execute gross margin improvement initiatives, and they may be downplaying concerns about capacity constraints and the impact of near-term headwinds on their long-term business outlook. Finally, management may lack confidence in their ability to sustain venting solutions market gains, execute their “razor to sell razor blade†strategy, and meet their EPS guidance
Donaldson is a manufacturer of filtration systems and replacement parts. The company has two operating segments: Engine Products, which consist of replacement filters for both air and liquid filtration applications, air filtration systems, liquid filtration systems for fuel, lube and hydraulic applications, and exhaust and emissions systems and sensors, indicators and monitoring systems; and Industrial Products, which consist of dust, fume and mist collectors, compressed air purification systems, gas and liquid filtration for food, beverage and industrial processes, air filtration systems for gas turbines, polytetrafluoroethylene membrane-based products and air and gas filtration systems.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.