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Dover (DOV) to Report Q1 Earnings: What's in the Cards?

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Dover Corporation (DOV - Free Report) is expected to report first-quarter 2018 results on Apr 27.

In the last reported quarter, the company posted a positive earnings surprise of nearly 8.7%. Notably, Dover surpassed the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 7.3%.

Let’s see how things are shaping up prior to this announcement.

Dover Corporation Price and EPS Surprise

 

Dover Corporation Price and EPS Surprise | Dover Corporation Quote

Factors at Play

We believe strong booking trends and significant drilling activity will drive the company’s performance in the first quarter.

Dover’s bookings increased roughly 13% year over year at the end of fourth-quarter 2017. Backlog also increased to $1.23 billion at the end of the quarter from $1.08 billion reported at the end of the year-ago quarter. Backed by solid bookings growth, the company is poised for an improved first-quarter 2018 performance. Further, significant drilling activity over the last few quarters has created a large backlog of drilled but uncompleted wells. Dover expects the completion of these wells to drive performance.

The Zacks Consensus Estimate for Dover’s earnings went up roughly 1.8% over the last 30 days and is currently pegged at $1.15 for the first quarter. The earnings estimate reflects year-over-year growth of around 64%. The Zacks Consensus Estimate for total sales of $1.9 billion for the quarter also indicates around 4.6% growth from the prior-year quarter.

Coming to the segments, the Zacks Consensus Estimate for net sales of Dover’s Fluids segment is pegged at $554 million for the quarter, representing year-over-year increase of 5.5%. The segment will benefit from sound growth in the Pumps, and hygienic and pharma businesses.

The Zacks Consensus Estimate for Refrigeration and Food Equipment segment’s net sales is pegged at $353 million for the quarter to be reported, representing year-over-year decline of 1.1%. Though the segment is anticipated to grow on improved productivity, prevalent softness in the commercial cooking equipment markets is a concern.

Meanwhile, the company expects that its Energy businesses will improve as a result of volume leverage. The Zacks Consensus Estimate indicates that the segment’s revenues will reach $384 million in the to-be-reported quarter, reflecting a year-over-year growth of about 18.5%.

Finally, the Zacks Consensus Estimate indicates that Dover’s Engineered Systems segment’s revenues will reach $612 million in the first quarter, representing a year-over-year improvement of 0.7%.

In addition, Dover’sprice performance has been impressive over the past year. Shares of the company have appreciated around 18%, modestly outperforming 17.8% growth recorded by the industry.



Earnings Whispers

Our proven model does not conclusively show that Dover is likely to beat on earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Dover currently has an Earnings ESP of -0.87%. This is because the Most Accurate estimate is pegged at $1.14, lower than the Zacks Consensus Estimate of $1.15. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:  Dover’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Graco Inc. (GGG - Free Report) , with an Earnings ESP of +0.67% and a Zacks Rank #2. The stock has appreciated 48% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

IDEX Corporation (IEX - Free Report) , with an Earnings ESP of +0.36% and a Zacks Rank #2. Its shares have rallied roughly 53% in the past year.

Illinois Tool Works Inc. (ITW - Free Report) , with an Earnings ESP of +0.43% and a Zacks Rank #3. The company’s shares have been up 19% during the same time frame.

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