Back to top

Image: Bigstock

Dover Corporation (DOV) Up 4.5% Since Last Earnings Report: Can It Continue?

Read MoreHide Full Article

A month has gone by since the last earnings report for Dover Corporation (DOV - Free Report) . Shares have added about 4.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Dover Corporation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Dover's Earnings and Sales Surpass Estimates in Q4

Dover reported fourth-quarter 2020 adjusted earnings per share from continuing operations of $1.55, which beat the Zacks Consensus Estimate of $1.37. The figure was up 1% year over year. The company’s productivity and cost initiatives drove top-line improvement in the quarter despite lower revenues.

On a reported basis, Dover delivered earnings per share of $1.25 in the December-end quarter, reflecting year-over-year growth of 9%.

Total revenues in the fourth quarter inched up 0.3% year over year to $1,780 million. The top line surpassed the Zacks Consensus Estimate of $1,724 million.

Costs and Margins

Cost of sales rose 0.4% year over year to $1,129 million in the reported quarter. Gross profit remained flat at $651 million compared with the prior-year quarter. Gross margin came in at 36.6% compared with the year-ago quarter’s 36.7%.

Selling, general and administrative expenses were up 0.6% to $406 million from the prior-year quarter. Adjusted operating profit increased to $305 million from the year-ago quarter’s $304 million. Operating margin was 17.1%, flat with the final quarter of 2019.

Adjusted EBITDA increased 0.5% year over year to $372.7 million. Adjusted EBITDA margin was 20.9% in fourth-quarter 2020, flat compared with the last-year quarter.

Segmental Performance

The Engineered Products segment revenues were down 7% year over year to $394 million in fourth-quarter 2020. The segment’s adjusted operating income decreased 18% year over year to $61 million.

The Fueling Solutions segment revenues declined 8% to $409 million from the year-earlier quarter’s $445 million. The segment’s adjusted operating income was down 4% year over year to $72 million.

The Imaging & Identification segment revenues increased 5% year over year to $288 million. The segment’s adjusted operating income fell 6% year over year to $58 million.

The Pumps & Process Solutions revenues climbed 6% year over year to $348 million in the fourth quarter. The adjusted operating income for the segment came in at $84.8 million compared with the year-ago quarter’s $75.2 million.

The Refrigeration & Food Equipment segment’s revenues increased to $342 million from the year-earlier quarter’s $306 million. The segment’s adjusted operating income totaled $28 million indicating year-over-year improvement of 71%.

Bookings and Backlog

Dover’s bookings at the end of the fourth quarter were worth $1.94 billion compared with prior-year quarter’s $1.84 billion. Backlog increased 20.7% year over year to $1.76 billion at the end of the reported quarter.

Financial Position

Dover had cash and cash equivalents of $513 million at the end of 2020 compared with $397 million at the end of 2019. The company generated free cash flow of $939 million in 2020 compared with $758 million in 2019. Cash flow from operations amounted to $1.1 billion in 2020 compared with the year-ago figure of $0.9 billion.

2020 Results

Dover reported adjusted earnings per share of $5.67 in 2020, down 4% from the prior year’s $5.93. Earnings beat the Zacks Consensus Estimate of $5.49 and came ahead of the management’s guidance of adjusted earnings per share between $5.40 and $5.45. Including one-time items, the bottom line was $4.70, up 2% year over year.
 
Sales declined 6% year over year to $6.68 billion in fiscal 2020. However, the top-line figure outpaced the Zacks Consensus Estimate of $6.62 billion.

Outlook

Backed by its ongoing progress in productivity and cost initiatives, the company expected to deliver robust top-line growth, margin expansion and earnings per share accretion in 2021. In 2021, Dover expects adjusted earnings per share between $6.25 and $6.45. Revenue growth is expected to be 8-10% (5% to 6% on an organic basis) for the full year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, Dover Corporation has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Dover Corporation has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Dover Corporation (DOV) - free report >>

Published in