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Dover (DOV) to Report Q3 Earnings: What's in the Offing?

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Dover Corporation (DOV - Free Report) is expected to report third-quarter 2018 results on Oct 18.

In the last reported quarter, the company posted a positive earnings surprise of 7.4%. Notably, Dover surpassed the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 5.81%.

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

Dover’s results are expected to benefit from strong booking trends in the third quarter. The company’s bookings increased roughly 7% year over year at the end of second-quarter 2018. Backlog also increased to $1.38 billion at the end of the second quarter from $1.26 billion reported at the end of the year-ago quarter.

Backed by solid bookings growth, the company is poised for an improved third-quarter 2018 performance. Further, its cost-reduction initiative, which includes overhead reduction, will boost margins. Dover will also gain from its focus on product digitization, e-commerce, new product development and inorganic investment.

The Zacks Consensus Estimate for Dover’s earnings inched up roughly 0.8% over the last 60 days and is currently pinned at $1.29 for the third quarter. The earnings estimate reflects year-over-year growth of around 11%. However, the Zacks Consensus Estimate for total sales of $1.76 billion for the quarter reflects a decline of 12.5% from the prior-year quarter, mainly affected by tariffs imposed on steel and aluminum and foreign exchange volatility.

Coming to the segments, the Zacks Consensus Estimate for net sales of Dover’s Fluids segment is pegged at $683 million for the quarter, representing year-over-year increase of 21%. The segment will benefit from sound growth in the Pumps, and hygienic and pharma businesses.

However, in Dover’s Fluids segment, the DFS business posted negative earnings conversion in the second quarter as a result of continued operational costs due to the European footprint consolidation, significant supply-chain costs, and accelerated fees and discrete items. The company expects that a significant portion of these issues will hurt the third-quarter earnings.

The Zacks Consensus Estimate for Refrigeration and Food Equipment segment’s net sales is $412 million for the Sep-end quarter, representing year-over-year decline of 6%. Though the segment is anticipated to grow on acquisitions, prevalent softness in the retail refrigeration markets is a concern.

Meanwhile, the Zacks Consensus Estimate indicates that Dover’s Engineered Systems segment’s revenues will reach $662 million in the third quarter, representing a year-over-year improvement of 2.5%.

Share Price Performance

Over the past year, Dover has underperformed the industry with respect to price performance mainly due to disappointing conditions in retail refrigeration. The stock has lost around 13%, while the industry has recorded loss of around 4% during the same time frame.



Zacks Rank & Key Picks

Dover carries a Zacks Rank #3 (Hold).

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

Tetra Tech, Inc. (TTEK - Free Report) has an Earnings ESP of +0.96% and a Zacks Rank #1 (Strong Buy). Its shares have gained 35% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flowserve Corporation (FLS - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #2 (Buy). The stock has gained 12% in a year’s time.

Deere & Company (DE - Free Report) has an Earnings ESP of +1.39% and a Zacks Rank #3. The company’s shares have been up 16% during the past year.

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