Donaldson (DCI) Surges 7.6% on Earnings Beat and Full-Year Guidance Hike

Summary
• Donaldson (DCI) reports Q1 earnings of $0.94/share, beating estimates by 1.08%
• Revenue jumps 3.9% to $935.4M, surpassing forecasts by 1.26%
• Full-year adjusted EPS guidance raised to $3.95–$4.11, up from $3.92–$4.08
• Stock surges 7.58% to $94.24, hitting 52-week high of $94.58

Donaldson’s shares are trading at a record high after a blockbuster earnings report and upgraded guidance. The filtration systems maker leveraged pricing power, volume growth, and cost discipline to deliver a double beat on both revenue and earnings. With a 7.6% intraday rally, investors are betting on sustained momentum in its Life Sciences segment and disciplined capital returns.

Earnings Beat and Guidance Hike Fuel Rally
Donaldson’s Q1 performance was a masterclass in operational execution. The company reported adjusted EPS of $0.94, outpacing the $0.93 consensus, while revenue of $935.4M exceeded estimates by 1.26%. The Life Sciences segment surged 13.1% year-over-year, driven by Food & Beverage and Disk Drive equipment sales. Management raised full-year adjusted EPS guidance to $3.95–$4.11, reflecting confidence in its razor-to-razorblades model and margin expansion. The stock’s 7.6% surge reflects optimism about its ability to sustain growth in high-margin aftermarket parts and navigate macroeconomic headwinds.

Options Playbook: Leverage High Gamma and IV for Short-Term Gains
• 200-day MA: 74.00 (well below current price)
• RSI: 47.62 (neutral, not overbought/sold)
• MACD: 1.26 (bullish, but signal line at 1.31 suggests caution)
• Bollinger Bands: Price at 94.24, above upper band (90.78) and middle band (87.31)

Donaldson’s technicals suggest a short-term bearish trend but long-term bullish setup. The stock is trading near its 52-week high, with RSI in neutral territory and MACD hinting at potential consolidation. Key support lies at the 200-day MA (74.00), while resistance is at the 52-week high (94.58).

Top Options Picks:
• DCI20251219C90 (Call, $90 strike, 12/19 expiration):
- Delta: 0.9508 (high sensitivity to price moves)
- IV Ratio: 13.47% (moderate)
- Gamma: 0.0379 (high sensitivity to price acceleration)
- Turnover: 8,544 (liquid)
- Leverage Ratio: 21.80% (moderate)
- Theta: -0.1509 (rapid time decay)
- Price Change Ratio: 140.00% (strong momentum)
- Why it stands out: High delta and gamma make it ideal for a bullish breakout above $90. With 140% price change ratio, it’s a leveraged play on continued upside.
- Payoff at 5% upside (98.95): Max(0, 98.95 - 90) = $8.95 per share.

• DCI20251219C95 (Call, $95 strike, 12/19 expiration):
- Delta: 0.4357 (moderate sensitivity)
- IV Ratio: 20.11% (reasonable)
- Gamma: 0.0993 (high sensitivity to price acceleration)
- Turnover: 913 (liquid)
- Leverage Ratio: 75.33% (high)
- Theta: -0.1159 (moderate time decay)
- Price Change Ratio: 135.85% (strong momentum)
- Why it stands out: High leverage ratio and gamma position it to capitalize on volatility. With 135% price change ratio, it’s a balanced bet on continued momentum.
- Payoff at 5% upside (98.95): Max(0, 98.95 - 95) = $3.95 per share.

Trading Setup: Aggressive bulls should target the DCI20251219C90 for a breakout above $90. For a more balanced approach, the DCI20251219C95 offers high leverage and gamma to ride volatility. Watch for a pullback to the 87.31 middle Bollinger Band as a potential entry trigger.

Backtest Donaldson Stock Performance
It looks like the Event-Backtest engine ran into an internal error (the convert_statistics function inside the engine failed). Because the failure occurred inside the engine’s own post-processing code, simply re-running with the same inputs is unlikely to succeed until the bug is fixed on the server side.Below are three alternative ways we can still complete your analysis right away. Please let me know which approach you prefer (or suggest another):1. Quick “fixed-horizon” strategy back-test (work-around) • I will treat every ≥ 8 % intraday-surge day as an “entry” signal, open a position at the next day’s open, and automatically exit after N trading days (e.g., 1-day, 5-day or 20-day hold). • Using the Strategy-Backtest engine (which is not affected by the current bug) we can compute key metrics such as average return, win rate, max drawdown, etc. for each holding horizon. • Default suggestion if you’re unsure: test 1-day, 5-day and 20-day exits.2. CSV / Excel export of the raw event list • I can give you the complete calendar of “≥ 8 % intraday-surge” dates. • You can then inspect or analyse the data offline while we wait for the Event-Backtest engine fix.3. Wait for the Event-Backtest engine bug to be resolved • Once the backend issue is fixed, we can re-run the original event study and obtain the full post-event return curve, optimal holding-period statistics, etc.Please let me know which option you’d like to proceed with, and feel free to adjust any parameters (e.g., desired holding horizon in option 1).

Donaldson’s Rally: A Test of Guidance Credibility
Donaldson’s 7.6% surge hinges on its ability to sustain the momentum behind its Life Sciences segment and disciplined capital returns. The upgraded guidance to $3.95–$4.11 implies a 10–14% upside from current levels, but execution risks remain in its On-Road and Aerospace segments. Investors should monitor the 94.58 52-week high as a critical resistance level. Meanwhile, sector leader 3M (MMM) is down 1.3%, signaling potential sector rotation. Action: Buy the DCI20251219C90 if $90 breaks, or short-term traders can scalp the DCI20251219C95 on a pullback to 87.31.