Core Insights - Donaldson Company, Inc. (NYSE:DCI) is recognized as one of the 14 Best Mid Cap Dividend Aristocrat Stocks to buy now [1] - Jefferies upgraded Donaldson to Buy from Hold, raising the price target to $120 from $92, citing early signs of improvement in mining and non-residential construction markets [2] - The company reported record sales of $935 million for fiscal Q1 2026, with an operating margin of 15.5% and EPS of $0.94, reflecting a 13% increase from the previous year [3] Financial Performance - Donaldson's fiscal Q1 2026 results showed broad-based momentum, with growth in Mobile Aftermarket, Power Generation, Food and Beverage, and Disk Drive sectors [3] - The company raised its full-year operating margin outlook by 10 basis points to a range of 16.2%–16.8%, with a midpoint of 16.5% [5] - EPS guidance for fiscal 2026 was increased by $0.03, now forecasting between $3.95 and $4.11, with a midpoint of $4.03 [5] Market Position and Growth Drivers - CEO Tod Carpenter highlighted expanding partnerships, including work with NAPA, and noted that the independent channel experienced nearly double-digit sales growth [4] - Strength in the Off-Road segment was attributed to construction activity, which helped mitigate weaker conditions in agriculture [4] - Strong demand in Power Generation was noted, driven by spending in data centers and AI-related infrastructure [4]

Core Insights - Major U.S. stock market indices closed positively on January 9, 2026, following December jobs data, with unemployment rate decreasing to 4.4% but job additions missing expectations [1] Group 1: Market Trends - Investors are shifting towards dividend-growth stocks due to a preference for quality and visibility amid economic uncertainty, as these stocks signal robust cash flows [2][9] - Stocks with a strong history of year-over-year dividend growth are seen as better investments for capital appreciation compared to simple dividend-paying stocks [3][6] Group 2: Characteristics of Dividend Growth Stocks - Dividend growth stocks belong to mature companies, providing a hedge against market volatility and economic uncertainty while offering downside protection through consistent payout increases [4] - These stocks typically exhibit superior fundamentals, including sustainable business models, profitability, rising cash flows, good liquidity, and strong balance sheets [5] Group 3: Selected Dividend Growth Stocks - Woodward Inc. (WWD): Expected revenue growth of 11.2% for fiscal 2026, long-term earnings growth rate of 15.20%, and annual dividend yield of 0.35% [10][11] - Cardinal Health (CAH): Projected revenue growth of 16.2% for fiscal 2026, long-term earnings growth rate of 13.90%, and annual dividend yield of 1.02% [12] - Fox Corp. (FOX): Anticipated revenue growth of 3.6% for fiscal 2027, long-term earnings growth rate of 10.10%, and annual dividend yield of 0.84% [13] - Kinross Gold (KGC): Expected revenue growth of 11% for fiscal 2026, long-term earnings growth rate of 36.5%, and annual dividend yield of 0.45% [14] - Donaldson (DCI): Projected revenue growth of 3.5% for fiscal 2026, long-term earnings growth rate of 10%, and annual dividend yield of 1.26% [15]

Core Viewpoint - Investors should closely monitor Donaldson Company, Inc. (DCI) stock due to significant implied volatility in the options market, particularly the Feb 20, 2026 $55.00 Put option [1] Group 1: Implied Volatility - Implied volatility indicates the market's expectation of future stock movement, with high levels suggesting potential for a significant price change or an upcoming event that could impact the stock [2] - High implied volatility in options may attract traders looking to sell premium, as they anticipate that the underlying stock will not move as much as expected by expiration [4] Group 2: Analyst Sentiment - Donaldson currently holds a Zacks Rank of 3 (Hold) within the Pollution Control Industry, which is positioned in the bottom 23% of the Zacks Industry Rank [3] - Over the past 60 days, one analyst has raised their earnings estimate for the current quarter, while three have lowered theirs, resulting in a consensus estimate decrease from 91 cents to 90 cents per share [3]

Market Overview - The U.S. stock market experienced a slight decline on December 26, 2025, primarily due to low trading volume following the Christmas holiday, with many institutional investors absent for the year [1] - Major indexes such as the S&P 500, Dow, and Nasdaq saw small dips, ending short winning streaks observed earlier in the week [1][9] Investment Strategy - During the holiday season, equity investors may favor dividend-growth stocks over high price-growth stocks, as companies with a consistent history of dividend increases often exhibit strong financial health [2] - Dividend-growth stocks provide a defensive hedge against economic uncertainty and market volatility, making them attractive during periods of low market activity [4] Dividend Growth Stocks - Stocks with a strong history of year-over-year dividend growth are considered healthier investments, offering greater potential for capital appreciation compared to simple dividend-paying stocks [3][6] - Five selected dividend-growth stocks include: - Woodward Inc. (WWD): Expected revenue growth of 11.1% for fiscal 2026, long-term earnings growth rate of 15.20%, and an annual dividend yield of 0.36% [10] - Enersys (ENS): Projected revenue growth of 4% for fiscal 2026, long-term earnings growth rate of 15%, and an annual dividend yield of 0.70% [11] - Donaldson (DCI): Anticipated revenue growth of 3.5% for fiscal 2026, long-term earnings growth rate of 10%, and an annual dividend yield of 1.31% [12] - Rockwell Automation (ROK): Expected revenue growth of 5.8% for fiscal 2026, long-term earnings growth rate of 12.4%, and an annual dividend yield of 1.38% [13] - Vertiv Holdings (VRT): Projected revenue growth of 27.5% for fiscal 2025, long-term earnings growth rate of 30.2%, and an annual dividend yield of 0.15% [14] Stock Selection Criteria - Stocks selected for their strong fundamentals include criteria such as: - 5-Year Historical Dividend Growth Greater Than Zero [6] - 5-Year Historical Sales Growth Greater Than Zero [7] - 5-Year Historical EPS Growth Greater Than Zero [7] - Next 3-5 Year EPS Growth Rate Greater Than Zero [7] - Price/Cash Flow Less Than Industry Median [8] - 52-Week Price Change Greater Than S&P 500 [8]

Market Overview - Major U.S. stock indices experienced a significant decline on December 12, 2025, primarily driven by sell-offs in technology stocks due to concerns over an AI bubble narrative [1] - Investors reacted negatively to news from Broadcom, which indicated expected margin pressure in its AI business for the first quarter of fiscal 2026, despite exceeding fiscal fourth-quarter earnings estimates [1] Investment Strategy - In the current market environment, equity investors may favor dividend-growth stocks over high price-growth stocks, as companies with a history of raising dividends typically demonstrate strong financial health, providing a defensive hedge against economic uncertainty [2] - Stocks with a strong history of year-over-year dividend growth are suggested to form a healthier portfolio with greater potential for capital appreciation compared to simple dividend-paying stocks or those with high yields [2] Selected Dividend Growth Stocks - Five dividend growth stocks have been identified as potential solid choices for investment: TE Connectivity (TEL), Enersys (ENS), Donaldson (DCI), Lam Research (LRCX), and Leidos Holdings (LDOS) [3][9] - These stocks exhibit positive sales and earnings per share (EPS) growth histories, consistent dividend increases, solid fundamentals, and favorable valuation metrics [9] Characteristics of Dividend Growth Stocks - Stocks with a strong history of dividend growth are typically associated with mature companies that are less vulnerable to market volatility, thus providing a hedge against economic or political uncertainties [4] - These stocks are characterized by superior fundamentals, including sustainable business models, long-term profitability, rising cash flows, good liquidity, strong balance sheets, and value characteristics [5] - Although these stocks may not have the highest yields, they have historically outperformed the broader stock market and other dividend-paying stocks [6] Performance Metrics - Selected stocks must meet specific criteria, including: - 5-Year Historical Dividend Growth Greater Than Zero - 5-Year Historical Sales Growth Greater Than Zero - 5-Year Historical EPS Growth Greater Than Zero - Next 3-5 Year EPS Growth Rate Greater Than Zero [7] - Additional metrics include a Price/Cash Flow ratio less than the industry median and a 52-Week Price Change greater than the S&P 500 [8] Individual Stock Insights - **TE Connectivity (TEL)**: Expected fiscal 2026 revenue growth of 10.2%, long-term earnings growth rate of 12.3%, and an annual dividend yield of 1.23% [10][11] - **Enersys (ENS)**: Projected fiscal 2026 revenue growth of 4%, long-term earnings growth rate of 15%, and an annual dividend yield of 0.71% [11][12] - **Donaldson (DCI)**: Anticipated fiscal 2026 revenue growth of 3.4%, long-term earnings growth rate of 10%, and an annual dividend yield of 1.30% [12] - **Lam Research (LRCX)**: Expected fiscal 2026 revenue growth of 14.1%, long-term earnings growth rate of 20.3%, and an annual dividend yield of 0.65% [13] - **Leidos Holdings (LDOS)**: Projected fiscal 2025 revenue growth of 3.4%, long-term earnings growth rate of 11.6%, and an annual dividend yield of 0.84% [14]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Donaldson (DCI) - Donaldson currently holds a Momentum Style Score of B, indicating a favorable position in momentum investing [2] - The company has a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [3] Performance Metrics - DCI shares have increased by 2.83% over the past week, while the Zacks Pollution Control industry remained flat [5] - Over the past month, DCI's price change is 7.48%, significantly outperforming the industry's 0.24% [5] - In the last quarter, DCI shares rose by 13.86%, and over the past year, they gained 28.13%, compared to the S&P 500's increases of 5.09% and 14.7%, respectively [6] Trading Volume - DCI's average 20-day trading volume is 742,294 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, four earnings estimates for DCI have been revised upwards, while none have been lowered, leading to an increase in the consensus estimate from $4.02 to $4.04 [9] - For the next fiscal year, two estimates have also moved upwards, with no downward revisions [9] Conclusion - Considering the positive momentum indicators and earnings outlook, DCI is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a strong candidate for near-term investment [11]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates can be challenging due to inherent volatility and risks [1] Group 1: Company Overview - Donaldson (DCI) is highlighted as a recommended growth stock, possessing a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 13%, with projected EPS growth of 9.8% this year, significantly outperforming the industry average of 5.6% [4] Group 2: Financial Metrics - Donaldson's asset utilization ratio (sales-to-total-assets ratio) is 1.25, indicating that the company generates $1.25 in sales for every dollar in assets, compared to the industry average of 0.74 [5] - The company's sales are expected to grow by 3.4% this year, while the industry average is stagnant at 0% [6] Group 3: Earnings Estimates - There is a positive trend in earnings estimate revisions for Donaldson, with the current-year earnings estimates increasing by 0.8% over the past month [7] - The company has earned a Growth Score of B and holds a Zacks Rank 2 due to these positive earnings estimate revisions, positioning it well for potential outperformance [9]

Core Viewpoint - Donaldson Company, Inc. (DCI) has shown a strong stock performance, gaining approximately 25% since June of the previous year, with expectations for further upside in the future [1]. Group 1: Company Performance - The stock of DCI has performed well, with a notable increase of around 25% since the last coverage in June [1]. - There is an optimistic outlook for DCI, suggesting potential for further stock price appreciation [1]. Group 2: Investment Strategy - The focus is on GARP (Growth at Reasonable Price) opportunities within the industrial, consumer, and technology sectors [1].

Core Viewpoint - Donaldson (DCI) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Company Performance and Investor Sentiment - The upgrade reflects an improvement in Donaldson's underlying business, suggesting that investors may respond positively by driving the stock price higher [5]. - Over the past three months, the Zacks Consensus Estimate for Donaldson has increased by 0.7%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Donaldson's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Insights - Donaldson Company, Inc. (DCI) reported adjusted earnings of 94 cents per share for Q1 fiscal 2026, surpassing the Zacks Consensus Estimate of 93 cents, reflecting a year-over-year increase of 13.3% [1] - Total revenues reached $935.4 million, exceeding the Zacks Consensus Estimate of $924 million, with a year-over-year growth of 3.9% [2] Revenue Results - Revenue breakdown shows a 0.6% decline in the United States/Canada, while Europe, the Middle East, and Africa saw a 9.1% increase, and Latin America increased by 5.9%. The Asia Pacific region improved by 6.6% [2] - Mobile Solutions segment, accounting for 64% of net sales, generated $598.3 million, up 4.5% year-over-year, with Off-Road sales rising 6.1% and On-Road sales declining 27.1% [3] - Industrial Solutions segment revenues were $257.8 million, a slight increase of 0.1% year-over-year, impacted by a 7.1% decline in Aerospace and Defense [4] - Life Sciences segment revenues increased by 13.1% year-over-year to $79.3 million, driven by new equipment and replacement part sales in the food and beverage sector [4] Margin Profile - Cost of sales rose 4.5% year-over-year to $606.6 million, while gross profit increased by 2.9% to $328.8 million, resulting in a gross margin of 35.2%, down 30 basis points due to inflation and inventory valuation issues [5] - Operating expenses decreased by 4.9% year-over-year to $179.5 million, leading to a 14.2% increase in operating profit to $149.3 million, with an operating margin of 16%, up 150 basis points [5] Balance Sheet & Cash Flow - Cash and cash equivalents at the end of Q1 were $210.7 million, up from $180.4 million in the previous quarter, while long-term debt increased to $671.5 million from $630.4 million [7] - The company generated net cash of $125.4 million from operating activities, a 72% increase year-over-year, with free cash flow rising 154.7% to $122 million [8] FY26 Outlook - For fiscal 2026, DCI expects adjusted EPS in the range of $3.95-$4.11, with sales growth anticipated between 1-5% from fiscal 2025 levels [11] - Segment-wise, Mobile Solutions sales are expected to be flat to increase by 4%, Industrial Solutions by 2-6%, and Life Sciences by 1-5% [12] - Capital expenditure is projected between $65 million and $85 million, with free cash flow conversion expected to be in the range of 85-95% [13]