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Dover (DOV) Misses Q4 Earnings Estimates; Revenue Up Y/Y

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Dover Corporation (DOV - Free Report) reported fourth-quarter 2016 adjusted earnings per share from continuing operations of 71 cents, which declined over 12% year over year. Earnings also missed the Zacks Consensus Estimate of 84 cents.

Including one-time items, earnings came in at $1.03 per share, up from the prior-year figure of $0.87.

Total revenue increased 5% year on year to $1.778 billion in the quarter, which came ahead of the Zacks Consensus Estimate for revenues of $1.703 billion. The year-over-year increase in revenue was driven by acquisition growth of 11%, offset by an organic revenue decline of 2%, a 3% impact from dispositions, and an unfavorable impact from foreign exchange of 1%.

Dover Corporation Price, Consensus and EPS Surprise

 

Dover Corporation Price, Consensus and EPS Surprise | Dover Corporation Quote

Costs and Margins

Cost of sales increased 7.2% year over year to $1.16 billion in the reported quarter. Gross profit inched up1% year over year to $619.7 million and subsequently gross margin contracted 130 basis points (bps) to 34.9%.

Selling, general and administrative expenses increased to $455.6 million from $414.4 million in the prior-year quarter. Operating profit declined17.7% to $164 million from $199 million in the year-ago quarter. Operating margin contracted 260 bps to 9.2%.

Segmental Performance

Energy revenues dipped 9.4% year over year to $293 million in the quarter. The segment reported an operating profit of $30.9 million, down 1.3% from $31.3 million a year ago.

Revenues in the Engineered Systems segment increased to $626.3 million from $597 million in the year-ago quarter. The segment’s income declined 8.5% year over year to $96.8 million.

Revenues in the Fluids segment surged 35.8% year over year to $482.9 million in the reported quarter. The segment’s income plummeted 44% year over year to $34.7 million.

The Refrigeration & Food Equipment segment’s revenues decreased 10% to $376.4 million from $418.8 million in the prior-year quarter. The segment reported an operating income of $118 million, significantly up from $42.8 million a year ago.

Bookings and Backlog

Dover’s bookings at the end of fourth quarter were worth $6.80 billion, in line with the end of fourth-quarter 2015. Backlog declined to $1.08 billion at the end of the reported quarter from $1 billion at the year-ago quarter end.

Financial Position

Dover generated free cash flow of $239.6 million in the fourth quarter, compared with $273.6 million in the prior-year quarter. Cash flow from operations came in at $289 million in the reported quarter compared with $316.6 million in the year-ago quarter.

2016 Performance

Dover reported adjusted earnings per share of $2.82 in 2016, down 22% from $3.63 per share recorded in the prior year. Earnings missed the Zacks Consensus Estimate of $2.92 per share. Including one-time items, the bottom line came in at $3.25, down 15% from $3.74 recorded in 2015.

Revenues declined 2% year over year to $6.8 billion from $7 billion in 2015. Revenues came ahead of the Zacks Consensus Estimate $6.72 billion.

Outlook

Dover reaffirmed its earnings per share guidance range of $3.40–$3.60 (excluding one-time items) for full-year 2017. The company also restated its full-year revenue growth guidance range of 10%–12%, including organic growth of 3%–5% and acquisition growth of approximately 10%, partially offset by a 1% impact from dispositions and a 2% headwind from foreign exchange.

Share Price Performance

In the last one year, Dover has outperformed the Zacks classified Industrial Services sub-industry with respect to price performance. The stock gained 47.3%, while the industry rose 36.3% over the same time frame.

 


 

Zacks Rank

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

Some better-ranked industrial product stocks are Altra Industrial Motion Corp. , Chart Industries, Inc. (GTLS - Free Report) and RBC Bearings Inc. .

Altra Industrial Motion delivered an average positive earnings surprise of 8.06% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chart Industries also boasts a Zacks Rank #1 and has delivered a whopping average positive earnings surprise of 548.51% in the past four quarters. RBC Bearings Incorporated, another Zacks Rank #1 stock, has an average positive earnings surprise of 1.60% for the past four quarters.

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