Donaldson Company, Inc.’s DCI first-quarter fiscal 2023 (ended Oct 31, 2022) earnings beat the Zacks Consensus Estimate by 7.1% and sales surpassed the same by 2.8%.The bottom line improved 23% from the year-ago fiscal quarter’s 61 cents. The sales growth in the reported quarter was partially offset by the headwinds related to supply-chain constraints and higher cost of raw materials.Revenue ResultsIn the fiscal first quarter, Donaldson’s net sales reached $847.3 million, reflecting year-over-year growth of 11.4%. The top line surpassed the Zacks Consensus Estimate of $824 million.Region-wise, DCI’s net sales in the United States/Canada increased 24.8% year over year. The top line expanded 0.9% in Europe, the Middle East and Africa and 31.9% in Latin America. However, the same decreased 8% in the Asia Pacific.Donaldson reports revenues under the following segments: Engine Products and Industrial Products. A brief snapshot of the segmental sales is provided below:Engine Products’ (accounting for 71.3% of net sales in first-quarter fiscal 2023) sales were $604.5 million, reflecting year-over-year growth of 14.7%.The results were positively impacted by 15% growth in Off-Road, 22% in Aerospace and Defense, 14.1% in Aftermarket sales and 14.4% in On-Road.Revenues generated from Industrial Products (accounting for 28.7% of net sales in first-quarter fiscal 2023) were $242.8 million, increasing 3.9% from the year-ago fiscal quarter.The results benefited from sales growth of 9.3% in Industrial Filtration Solutions and 53.3% in Gas Turbine Systems. However, sales declined 29.3% in Special Applications.Donaldson Company, Inc. Price and Consensus Donaldson Company, Inc. price-consensus-chart | Donaldson Company, Inc. QuoteMargin ProfileIn the fiscal first quarter, Donaldson’s cost of sales increased 11.2% year over year to $560.1 million. Gross profit jumped 11.8% to $287.2 million, while the gross margin increased 10 basis points (bps) to 33.9%. The margin results benefited from favorable pricing, partially offset by higher raw material costs.Operating expenses increased 12.3% year over year to $167.9 million. Operating profit in the quarter under review increased 11% to $119.3 million. The operating margin was 14.1%, flat year over year.The effective tax rate in the quarter was 25.2%, compared with 25.9% in the year-ago quarter.Balance Sheet & Cash FlowWhile exiting first-quarter fiscal 2023, Donaldson’s cash and cash equivalents were $161 million, down 16.7% from $193.3 million recorded in the last fiscal year’s comparable quarter. Long-term debt was down 6.8% year over year to $600.7 million.In the first three months of fiscal 2023, Donaldson repaid its long-term debt of $40 million.In the same time period, DCI generated net cash of $118.2 million from operating activities, reflecting an increase of 175.6% from the year-ago figure. Capital expenditure (net) totaled $28.1 million compared with $18.3 million in the year-ago fiscal period. Free cash flow increased 266.3% to $90.1 million.DCI also used $45.7 million to repurchase shares and $28.2 million to pay out dividends during the first three months of fiscal 2023.OutlookFor fiscal 2023 (ending July 2023), Donaldson expects earnings per share of $2.91-$3.07 compared with 2022 GAAP and adjusted EPS of $2.66 and $2.68, respectively. Sales are anticipated to increase 1-5% from the fiscal 2022 level. Positive pricing is anticipated to have an accretive impact of 6%. However, movement in foreign currencies are expected to negatively impact sales by 5%.On a segmental basis, Engine Products sales are anticipated to increase 1-5% from the fiscal 2022 level compared with 0-4% predicted earlier. The segment’s performance is likely to benefit from mid-single-digit growth in aftermarket, and aerospace & defense sales. On-road and off-road sales are expected to be flat in the fiscal year against the low single-digits decline predicted earlier.Sales growth for Industrial Products is anticipated to be 1-5%from the fiscal 2022 figure, compared with 3-7% predicted earlier. The segment is likely to gain from high-single-digit growth in Industrial Filtration Solutions. Gas Turbine Systems sales are projected to be up low-single digits, while Special Applications sales are anticipated to decline in the mid-teens digit compared with the prior-year period’s figure.Adjusted operating margin is expected to be 14.5-15.1% for fiscal 2023, suggesting an increase from the reported and adjusted operating margin of 13.4% and 13.5%, respectively, in fiscal 2022. Interest expenses are predicted to be approximately $18 million compared with $14.5-$15 million expected earlier. The fffective tax rate is anticipated to be 25-27%.Capital expenditure for the fiscal year is expected to be $115-$135 million. Free cash flow conversion is anticipated to be 110-125%. Share buybacks are expected to account for 2% of the outstanding shares.Zacks Rank and Other Key PicksDCI currently carries a Zacks Rank #3 (Hold).Some better-ranked companies from the Industrial Products sector are discussed below:Applied Industrial Technologies, Inc. AIT presently has a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.AIT’s earnings estimates have increased 4.6% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 28% in the past six months.IDEX Corporation IEX presently has a Zacks Rank of #2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.In the past 60 days, IDEX’s earnings estimates have increased 1.8% for 2022. The stock has rallied 24.1% in the past six months.EnerSys ENS delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank of 2.ENS’ earnings estimates have increased 0.6% for fiscal 2023 (ending March 2023) in the past 60 days. The stock has gained 12.4% in the past six months. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report IDEX Corporation (IEX): Free Stock Analysis Report Donaldson Company, Inc. (DCI): Free Stock Analysis Report Enersys (ENS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research