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Dover's (DOV) PSG Unit Closes Sale of Finder to Gruppo Aturia

Zacks Equity Research

Dover Corporation DOV has completed the sale of Finder Pompe S.r.l ("Finder") to Gruppo Aturia S.p.A. Headquartered in Merate, Italy, Finder is part of the Pump Solutions Group (PSG) business within Dover’s Fluids segment.
Finder is one of the leading European companies in the design and manufacturing of engineered pumps, spare parts and systems for critical applications in the oil and gas market. Its key products are sold worldwide to major engineering companies and to end users of oil and gas, petrochemical, nuclear energy, desalination, power generation, chemical, pharmaceutical and food. In 2018, Finder generated revenues of around $30 million.

Dover’s PSG unit is a global leader in the manufacture of pumps, systems and related technologies. In 2013, PSG acquired Italy-based Finder for $145 million in a bid to strengthen the foothold of PSG business in the energy market and enhance its global footprint.

Following the above-mentioned transaction, Dover will receive $24 million in cash and record a non-cash after-tax charge of about $40-$50 million due to the write-off of net carrying value of assets, which includes goodwill and foreign-exchange cumulative translation adjustment (CTA) held in equity. The transaction will be reflected in the first-quarter 2019 financials. However, the deal will have no impact on Dover's previously-provided adjusted EPS guidance for the ongoing year.
The divesture is in line with Dover’s strategy to reduce exposure in highly-cyclical upstream energy markets. It will also enable its PSG business to focus on hygienic pump technologies and positive displacement.

Coming to the price performance, Dover’s shares have lost around 1.7% over the past year, against the industry’s growth of 4.4%.

Dover has a long tradition of making successful acquisitions in diverse end markets. In January 2018, the company acquired Ettlinger Group, in a bid to boost its presence in the plastics and polymers processing equipment industry. Further, the buyout of Rosario Handel B.V. ("Rosario") — a manufacturer of decorator and base coating machinery used in the production of beverage, food and aerosol cans — will help serve the Food Equipment end market within the Refrigeration & Food Equipment segment. On Jan 25, 2019, Dover completed the acquisition of Belanger, which is expected to be accretive to the company’s margins and adjusted earnings in 2019.

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

Dover is progressing well with its efforts to simplify the portfolio and focus on markets with growth prospects. In sync with this, it successfully completed the spin-off of its upstream energy businesses — Apergy — last May. Following the spin-off, the company no longer owns the Energy segment and has three reportable segments. Thus, the divestment will enable Dover to focus on less volatile core platforms by delivering innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services.

Dover Corporation Price and Consensus

Dover Corporation Price and Consensus | Dover Corporation Quote

Zacks Rank & Stocks to Consider

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

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 19.2%, over the past year.

Lawson Products has an outstanding projected earnings growth rate of 102.5% for the current year. The stock has appreciated 28.1% 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 12.4%, in the past year.

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