Donaldson’s stock set to surge after profit and sales beats, raised guidance

Shares of Donaldson Co. Inc. were indicated up more than 4% in premarket trading Wednesday, after the filtration products company reported fiscal third-quarter profit and record sales that beat expectations, and raised its full-year outlook. Net income rose to $84.4 million, or 66 cents a share, from $63.4 million, or 50 cents a share, in the year-ago period. The FactSet consensus for earnings per share was 58 cents. Sales grew 21.5% to $765.0 million, beating the FactSet consensus of $707.6 million, as engine sales increased 26.3% and industrial sales rose 11.8%. “Donaldson’s third quarter sales were the highest quarterly sales in our 106-year history and reflected strength in the economy as seen in our Engine segment and the beginning of recovery in our Industrial segment,” said Chief Executive Tod Carpenter. “Additionally, although we faced pressures from our supply chain, raw material costs, and sales mix, we were able to offset this with volume leverage and recorded a year-over-year increase in gross margin of 50 basis points to 33.7%.” For fiscal 2021, the company raised its adjusted EPS outlook to $2.28 to $2.34 from $2.17 to $2.25, its engine sales growth outlook to between 12% and 14% from between 8% and 12% and its industrial sales growth view to between 3% and 5% from between negative 2% and positive 2%. The stock has advanced 11.7% year to date through Tuesday, while the S&P 500 has gained 11.9%.

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