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We expect Dover Corporation (DOV - Analyst Report) to beat expectations when it reports second-quarter 2013 results on Jul 18. Last quarter, it posted a 1.85% positive surprise. Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Dover is likely to beat earnings because it has the two key ingredients.

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.78%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Rank of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell rated stocks (#4 and #5) should never be considered going into an earnings announcement.  

The combination of Dover’s Zacks Rank # 3 (Hold) and +0.78% ESP makes us expect a positive earnings beat on Jul 18.

What is Driving the Better than Expected Earnings?

Dover will continue to benefit from its active acquisition pipeline, bookings and orders growth. Dover’s focus on new OEM product launch will help in generating a positive earnings surprise in the upcoming quarter.

In addition, Dover’s decision to spin off certain parts of its communication technologies businesses will simplify its business profile and enable it to focus on key growth spaces - Energy, Fluids, Refrigeration & Food Equipment and Printing & Identification. Moreover, increased focus on global market expansion will help the company in achieving solid revenue growth.

Other Stocks to Consider

Dover is not the only firm looking up this earnings season. We also see likely earnings beats coming from these 3 industry peers:

Gardner Denver Inc. , Earnings ESP of +3.18% and a Zacks Rank #2 (Buy).

Illinois Tool Works Inc. (ITW - Analyst Report), Earnings ESP of +1.82% and a Zacks Rank #3 (Hold).

Flowserve Corp. (FLS - Analyst Report), Earnings ESP of +1.27% and a Zacks Rank #3 (Hold).

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