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Dover (DOV) Down to Strong Sell: Time to Offload the Stock?
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On Oct 13, Dover Corporation (DOV - Free Report) was downgraded to a Zacks Rank #5 (Strong Sell) on lowered 2016 EPS and revenue guidance.
Why the Downgrade?
On Oct 10, the industrial products and manufacturing equipment maker trimmed its full-year 2016 EPS and revenue outlook. Dover lowered its full-year 2016 EPS to the range of $3.00−$3.05 from the prior estimate of $3.35−$3.45. The revised guidance includes an expected 6 cents of other costs to be incurred in the fourth quarter. It includes 3 cents dilution related to recently closed acquisitions and incremental deal costs along with restructuring charges of 3 cents.
In addition, Dover projects third-quarter EPS to be in the range of 81−83 cents. The company now expects full-year revenue to decline 4% to 5% versus its prior forecast of -3% to -5%. The revised forecast includes organic revenue of -7% to -8%, compared to the prior forecast of -6% to -8%.
The company cited generally weaker capital spending across several industrial end markets, continued weakness in longer cycle oil & gas exposed markets and persistent headwinds in its retail refrigeration business related to production inefficiencies as the primary reasons for the guidance cut. The revised EPS guidance reflects a 38 cents reduction at the mid-point from the previous forecast, mainly due to lower performance.
Additionally, Dover expects the macro global economy to remain soft, later cycle oil & gas exposed businesses to remain weak along with continued margin pressure in Refrigeration & Food Equipment through the end of the year.
In addition, Dover also cautioned that its pending acquisition of Wayne is now expected to close in the first quarter of 2017, driven by the U.K. Competition and Markets Authority’s (CMA) decision to refer the acquisition for a Phase II investigation. A Phase II investigation can be avoided if Dover offers remedies that resolve the CMA’s concerns about the competitive overlap in the supply of fuel dispensers in the U.K. The company intends to work diligently with the CMA to address these concerns.
The negative sentiment has been exhibited in the downward revision in analyst estimates over the past 7 days. The Zacks Consensus Estimate decreased 11% to $2.92 per share for 2016 and 4% to $3.83 for 2017.
Barnes Group carries a Zacks Rank #2 (Buy) and has witnessed a 1% increase in its earnings estimate to $2.51 for 2016. Chart Industries, also a Zacks Rank #2 stock, has seen upward estimate revisions of 49% over the past 90 days.
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Dover (DOV) Down to Strong Sell: Time to Offload the Stock?
On Oct 13, Dover Corporation (DOV - Free Report) was downgraded to a Zacks Rank #5 (Strong Sell) on lowered 2016 EPS and revenue guidance.
Why the Downgrade?
On Oct 10, the industrial products and manufacturing equipment maker trimmed its full-year 2016 EPS and revenue outlook. Dover lowered its full-year 2016 EPS to the range of $3.00−$3.05 from the prior estimate of $3.35−$3.45. The revised guidance includes an expected 6 cents of other costs to be incurred in the fourth quarter. It includes 3 cents dilution related to recently closed acquisitions and incremental deal costs along with restructuring charges of 3 cents.
In addition, Dover projects third-quarter EPS to be in the range of 81−83 cents. The company now expects full-year revenue to decline 4% to 5% versus its prior forecast of -3% to -5%. The revised forecast includes organic revenue of -7% to -8%, compared to the prior forecast of -6% to -8%.
DOVER CORP Price and Consensus
DOVER CORP Price and Consensus | DOVER CORP Quote
The company cited generally weaker capital spending across several industrial end markets, continued weakness in longer cycle oil & gas exposed markets and persistent headwinds in its retail refrigeration business related to production inefficiencies as the primary reasons for the guidance cut. The revised EPS guidance reflects a 38 cents reduction at the mid-point from the previous forecast, mainly due to lower performance.
Additionally, Dover expects the macro global economy to remain soft, later cycle oil & gas exposed businesses to remain weak along with continued margin pressure in Refrigeration & Food Equipment through the end of the year.
In addition, Dover also cautioned that its pending acquisition of Wayne is now expected to close in the first quarter of 2017, driven by the U.K. Competition and Markets Authority’s (CMA) decision to refer the acquisition for a Phase II investigation. A Phase II investigation can be avoided if Dover offers remedies that resolve the CMA’s concerns about the competitive overlap in the supply of fuel dispensers in the U.K. The company intends to work diligently with the CMA to address these concerns.
The negative sentiment has been exhibited in the downward revision in analyst estimates over the past 7 days. The Zacks Consensus Estimate decreased 11% to $2.92 per share for 2016 and 4% to $3.83 for 2017.
Stocks to Consider
Some better-ranked industrial product stocks are Nordson Corporation (NDSN - Free Report) , Barnes Group Inc. (B - Free Report) and Chart Industries Inc. (GTLS - Free Report) . Nordson Corporation has seen upward estimate revisions of around 6% over the past 60 days. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Barnes Group carries a Zacks Rank #2 (Buy) and has witnessed a 1% increase in its earnings estimate to $2.51 for 2016. Chart Industries, also a Zacks Rank #2 stock, has seen upward estimate revisions of 49% over the past 90 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>