Dover's (DOV) Earnings Trump, Sales Miss Estimates in Q4

Dover Corporation DOV reported fourth-quarter 2019 adjusted earnings per share from continuing operations of $1.54. The figure improved 7.7% from the prior-year quarter’s $1.43 per share. Earnings also beat the Zacks Consensus Estimate of $1.46.

On a reported basis, Dover delivered earnings per share of $1.15 in the December-end quarter, up 7.5% year over year.

Total revenues in the quarter came in at $1,775.5 million, marking a decline of 1.8% from the year-ago quarter’s $1,808.9 million. The revenue figure also missed the Zacks Consensus Estimate of $1,804 million.

Costs and Margins

Cost of sales fell 3.4% to $1,124 million in the October-December quarter. Gross profit inched up 0.9% year over year to $651.3 million.

Selling, general and administrative expenses slipped 5.4% to $403.2 million from the $426.2 million reported in the prior-year quarter. Operating profit increased to $248 million from the year-ago quarter’s $218.7 million.

Dover Corporation Price, Consensus and EPS Surprise

Dover Corporation Price, Consensus and EPS Surprise

Dover Corporation price-consensus-eps-surprise-chart | Dover Corporation Quote

Segmental Performance

The Engineered Products segment revenues went up to $422 million from the $412.3 million recorded in the year-ago quarter. The segment’s income increased 19.6% year over year to $73 million.

The Fueling Solutions segment revenues increased to $444.7 million from the $415.3 million recorded in the prior year quarter. The segment’s income rose 37% year over year to $74 million.

The Imaging & Identification segment revenues went down to $274.4 million from the $284.4 million recorded in the comparable period last year. The segment’s income went up 8.5% year over year to $57.2 million.

The Pumps & Process Solutions revenues declined 11.3% year over year to $328 million in the quarter. The segment income slipped 4.4% year over year to $71.3 million.

The Refrigeration & Food Equipment segment’s revenues declined 6.3% to $306.2 million from the year-ago quarter’s reported figure of $326.8 million. The segment’s operating income rose 10% year over year to $14.4 million.

Bookings and Backlog

Dover’s bookings at the end of the fourth quarter were worth $1.84 billion, down from the $1.85 billion recorded at the end of fourth-quarter 2018. Backlog increased 7.4% year over year to $1.45 billion at the end of the reported quarter.

Financial Position

Dover generated free cash flow of $759 million in 2019 compared with the $618 million recorded in 2018. Cash flow from operations came in at $945.3 million in 2019 compared with the $789 million witnessed in 2018.

2019 Performance

Dover reported adjusted earnings per share of $5.93 for 2019, up 19.3% from the $4.97 per share recorded in the prior year. Earnings also surpassed the Zacks Consensus Estimate of $5.85.

 Revenues grew 2.1% year over year to $7.14 billion from the $6.99 billion witnessed in 2018. Nevertheless, revenues lagged the Zacks Consensus Estimate of $7.17 billion.

Outlook

Dover is focused on expanding productivity initiatives while its mergers and acquisitions pipeline remain robust. The company is well poised to register top-line growth, margin expansion and solid earnings per share (EPS) accretion in the current year. It continues to create value through sustainable growth, profitability improvement, strong cash flow, smart organic and inorganic capital deployment.

For 2020, Dover now expects to generate adjusted EPS in the band of $6.20-$6.40 based on 2-3% revenue growth.

On Jan 24, the company completed the acquisition of Systech International. The transaction is expected to accretive to the first-year adjusted EPS. On the same date, Dover entered into an agreement to acquire Soft-Pak, Incorporated. The deal is likely to close in the ongoing quarter.

Share Price Performance

Over the past year, Dover’s shares have appreciated 32.6% compared with the industry’s growth of 24.4%.

 

Zacks Rank and Stocks to Consider

Dover currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are SPX FLOW, Inc. FLOW, DXP Enterprises, Inc. DXPE and Cintas Corporation CTAS. While SPX FLOW flaunts a Zacks Rank #1 (Strong Buy), DXP Enterprises and Cintas carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today's Zacks #1 Rank stocks here.

SPX FLOW has a projected earnings growth rate of 9.1% for 2020. The company’s shares have gained 41.6% in the past year.

DXP Enterprises has an estimated earnings growth rate of 10.5% for the ongoing year. In a year’s time, the stock has appreciated 23.1%.

Cintas has an expected earnings growth rate of 15.6% for the current year. The stock has surged 57.8% over the past year.

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