Why Donaldson Stock Sank This Week, But You Shouldn't Sell in Panic
Key Points
Donaldson's earnings missed estimates, but Q2 was still a record quarter.
The company is about to make a massive acquisition this year.
- 10 stocks we like better than Donaldson ›
Shares of Donaldson Company (NYSE: DCI) were up nearly 24% this year through mid-February. Investor sentiment waned as earnings approached, and the stock dropped 18.2% at its lowest point this week, soon after its earnings were released on the morning of Feb. 26.
Donaldson delivered record numbers for its second quarter of fiscal 2026, but they fell short of analysts' estimates. Even projections of a record year ahead couldn't save the stock price from falling. Here's why.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
Why is Donaldson stock falling?
Donaldson's sales volumes dipped in Q2 as sales of on-road equipment fell, primarily because of lower global truck production and volume declines in aerospace and defense. The company, however, still reported 3% revenue growth, driven by better pricing and favorable foreign currency translation. Its operating margin dipped slightly from 14.4% to 13.2%.
Donaldson also trimmed its fiscal 2026 adjusted earnings per share guidance to a range of $3.93-$4.01 per share, down from the previous range of $3.95-$4.11 a share, signaling ongoing near-term challenges. While life sciences remains a bright spot, project timings in aerospace and defense, and weakness in trucking are expected to hurt sales.
Because the new midpoint is below consensus estimates, Donaldson stock plunged after earnings.
Why this drop could be an opportunity to buy
Those numbers aren't nearly as bad as even the revised guidance points at a record 2026. Moreover, Donaldson recently announced plans to acquire Facet for $820 million in cash and debt.
Facet specializes in filtration solutions for the aerospace and defense industries and power generation. Importantly, Facet also caters to mission-critical industries, deriving a quarter of its sales from military applications across aviation, marine, and land. Facet should also significantly expand Donaldson's international footprint, as it generates over 40% of its sales outside North America.
Donaldson will pause its share repurchase program for the second half of 2026 to fund the acquisition, but that's not a bad thing. Facet should add substantial value to Donaldson's business, which is why investors shouldn't write off this industrials stock just yet. In fact, a dip could even be an opportunity to buy now.
Should you buy stock in Donaldson right now?
Before you buy stock in Donaldson, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Donaldson wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $456,188!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,133,413!*
Now, it’s worth noting Stock Advisor’s total average return is 916% — a market-crushing outperformance compared to 194% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of February 27, 2026.
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Donaldson. The Motley Fool has a disclosure policy.
Recommended Articles
