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Donaldson Company Symbol: DCI A company profile is available at Yahoo HERE
Earnings Per Share and Book Value Analysis
I have dissected some simple and readily available data on DCI.The share price on June 18, 2008 is $ 49.47/share - $ 50.00 per share for my purposes.
Current EPS are $ 2.05 - based on my thinking, earnings can compound at an annual rate
of 14 percent over the next 20 years. This number is not arbitrarily selected, but rather deduced
based on careful analysis of the past, and a high probability of achievement in the future given this
stellar past performance. I also used a forward PE average of 17 times earnings given historical PE
ratios. Now the PE may fluctuate, but past performance again provides me a fairly high
probability of being right about this number going forward.
Column 2 tracks earnings out 20 years. Column 3 indicated the estimated growth
rate of earnings while column 4 includes my best guess for a forward PE.
Column 5 then results in my best guesstimate for the future share price (average)
OVER TIME, clearly understanding that there will be ups and downs along the way.
Column 5 shows that in year 10, the estimated share price would be about $ 113.00/shareIn Column 6, I have entered my best guesstimate as to the estimated annual compound rate of growth in book value.
The figure input is 14%, and this number is conservative given the consistency in the past. Today's book value
is highlighted in Column 7 and stands at about $ 9.00/share. Column 8 shows my best guesstimate as to the Return on Equity
achievable over the next 10-20 years. I have estimated 20% as a reasonable value. Column 9 then estimates
what to expect in terms of EPS given the return on equity expectation. Column 10 estimates the probable share price
over time with a value approaching $ 100.00 per share in year 10.Further down below the chart I have input today's share price along with a very basic estimate
for the annual dividend payments I can expect (on average), along with my estimated
share price 10 years out. I have selected $ 99.00/share or basically double today's share price.
This is very conservative and I would suspect that a value of $ 110.00-$ 115.00 per share might be more realistic.As a result, one can determine an estimated return over time of at least 8.32 % given today's share price of $ 50.00.
The Dividend Post attempts to place a value on individual companies as well as estimated returns over time.
Your investment criteria and risk appetite will determine if you wish to invest in this equity, and will also help
you determine the price you might be willing to pay given your return expectations over time.
Company Name
June 18 2008 Donaldson Company DCI
Current share price
$49.47
Column 1
Column 2
Column 3
Column 4
Column 5
Column 6
column 7
column 8
column 9
column 10
Year
EPS
EPS Growth Rate
PE average
Estimated share price
Book Value Estimated Growth Rate
Book Value
Estimated Return on equity'
Estimated EPS based on ROE
Estimated share price
1
$2.05
14.00%
17
$34.85
14.00%
$9.00
0.20
$1.80
$30.60
2
$2.34
14.00%
17
$39.73
14.00%
$10.26
0.20
$2.05
$34.88
3
$2.66
14.00%
17
$45.29
14.00%
$11.70
0.20
$2.34
$39.77
4
$3.04
14.00%
17
$51.63
14.00%
$13.33
0.20
$2.67
$45.34
5
$3.46
14.00%
17
$58.86
14.00%
$15.20
0.20
$3.04
$51.68
6
$3.95
14.00%
17
$67.10
14.00%
$17.33
0.20
$3.47
$58.92
7
$4.50
14.00%
17
$76.49
14.00%
$19.75
0.20
$3.95
$67.17
8
$5.13
14.00%
17
$87.20
14.00%
$22.52
0.20
$4.50
$76.57
9
$5.85
14.00%
17
$99.41
14.00%
$25.67
0.20
$5.13
$87.29
10
$6.67
14.00%
17
$113.33
14.00%
$29.27
0.20
$5.85
$99.51
11
$7.60
14.00%
17
$129.20
14.00%
$33.36
0.20
$6.67
$113.44
12
$8.66
14.00%
17
$147.28
14.00%
$38.04
0.20
$7.61
$129.32
13
$9.88
14.00%
17
$167.90
14.00%
$43.36
0.20
$8.67
$147.43
14
$11.26
14.00%
17
$191.41
14.00%
$49.43
0.20
$9.89
$168.07
15
$12.84
14.00%
17
$218.21
14.00%
$56.35
0.20
$11.27
$191.60
16
$14.63
14.00%
17
$248.76
14.00%
$64.24
0.20
$12.85
$218.42
17
$16.68
14.00%
17
$283.58
14.00%
$73.24
0.20
$14.65
$249.00
18
$19.02
14.00%
17
$323.28
14.00%
$83.49
0.20
$16.70
$283.86
19
$21.68
14.00%
17
$368.54
14.00%
$95.18
0.20
$19.04
$323.60
20
$24.71
14.00%
17
$420.14
14.00%
$108.50
0.20
$21.70
$368.90
What is your investment's price per share today?
$49.47
How long do you plan to hold the investment (in years)?
10.00
What is the target price price per share?
$ 99.00
What annual payments will the share provide?
$ 0.75
This is your expected annualized rate of return:
8.32%
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