Dover (DOV) Hits 52-Week High: What's Driving the Rally?

Shares of Dover Corporation DOV scaled a fresh 52-week high of $97.65 on Apr 5, before closing the day at $96.54. Solid fourth-quarter 2018 performance and an encouraging 2019 outlook have contributed to this rally.

Dover, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $14 billion. The company has an expected long-term earnings per share growth rate of 12%, higher than the industry average of 11.3%. Also, Dover surpassed the Zacks Consensus Estimate in the trailing four quarters, recording average positive earnings surprise of 6.59%.

Dover’s shares have gained 26.4% in the last three months, significantly outperforming the industry’s growth of 19.1%.

Driving Factors

Dover’s fourth-quarter 2018 adjusted earnings and revenues climbed 25% and 3.2%, respectively, on a year-over-year basis. The metrics also beat their respective Zacks Consensus Estimate. Strong overall demand drove organic revenue growth in the Engineered Systems and Fluids segments, which offset weak demand in the Refrigeration & Food Equipment segment.

Dover’s first-quarter 2019 results are likely to improve on strong bookings growth, solid order backlog, margin improvement and rightsizing programs. Through 2019, impressive performance in the Engineered Systems and Fluids segments, along with strong organic growth, benefits from cost-containment actions, as well as footprint optimization projects and retail refrigeration will negate the impact of weak demand in the segment.

Dover projects adjusted EPS at $5.65-$5.85 for the current year. The company anticipates full-year revenue growth of 2-3%, which comprises organic growth of 2-4% and a 1% impact from the Belanger acquisition. This is likely to be partly offset by an expected 2% unfavorable impact from foreign-currency exchange. On Jan 25, Dover completed the Belanger acquisition, which will likely be accretive to margins and earnings in 2019.

Dover also expects to benefit in 2019 from its targeted cost-reduction initiative. The company has executed restructuring programs to better align costs and operations with current market conditions through targeted facility consolidations, headcount reduction and other measures. The company expects annualized run rate savings of $18 million in the ongoing year.

Positive Growth Projections

Analysts are steadily growing bullish on the stock. Over the last 90 days, the Zacks Consensus Estimate for the company moved 1.8% north to $5.73 for 2019. For 2020, the Zacks Consensus Estimate for earnings has gone up 3.2% to $6.17, over the same timeframe.
 
The Zacks Consensus Estimate for Dover’s 2019 earnings is currently pegged at $5.73, reflecting expected year-over-year growth of 15.3%. The same for 2020 is pinned at $6.17, indicating a year-over-year rise of 7.6%.

Dover Corporation Price and Consensus

Dover Corporation Price and Consensus | Dover Corporation Quote

Stocks to Consider

A few better-ranked stocks in the Industrial Products sector are Mueller Industries, Inc MLI, Lawson Products, Inc. LAWS and Albany International Corp. AIN, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mueller Industries has an expected earnings growth rate of 2.2% for 2019. The company’s shares have rallied 23.5%, over the past year.

Lawson Products has an outstanding projected earnings growth rate of 102.5% for the current year. The stock has appreciated 29.6% in a year’s time.

Albany International has an estimated earnings growth rate of 44.7% for the ongoing year. The company’s shares have gained 15.9%, in the past year.

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