Donaldson Earns 84 Cents Per share

I often tell investors not to worry about a stock once they’ve sold it, especially if they sell it for a profit. Of course, this is the advice that I most often don’t follow myself.

At the end of 2009, I decided to drop Donaldson ($DCI) from my 2010 Buy List. I only switch five stocks each year. Donaldson is in the filtration biz. Exciting, I know, but it’s a wonderful company and I’m kicking myself for culling it from the Buy List.

In 2010, DCI rallied for 38.5% (including dividends) and it’s up another 1.5% this year, which is still better than the overall market. Yesterday, the company reported Q4 earnings of 84 cents per share which was five cents better than estimates.

For the year just ended, Donaldson earned $2.87 per share which was a nice jump over the $2.10 per share they made the year before. Donaldson also gave full-year 2012 guidance of $3.15 to $3.45 per share. That’s very wide but I expect it to be narrowed as the year goes on. I always prefer to have companies that provide guidance even if it’s far from exact.

If we take the midpoint of the range ($3.30), DCI is going for 17.8 times earnings which is a bit rich for this market. Still, that’s what I thought in late 2009 and the stock has continued to outperform. If they keep beating expectations like they have been doing, Donaldson’s stock should see brighter days.

Posted by on August 30th, 2011 at 2:41 pm

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