Dover Corporation (DOV Quick QuoteDOV - Free Report) reported third-quarter 2018 adjusted earnings per share from continuing operations of $1.36. The figure improved 14% from $1.19 recorded in the prior-year quarter, mainly driven by a strong demand in the Engineered Systems and Fluids segments. Earnings also beat the Zacks Consensus Estimate of $1.29.

 

On a reported basis, Dover posted earnings per share of $1.05 in the quarter, which increased 4% year over year. Earnings included acquisition-related amortization costs of 18 cents and rightsizing costs of 13 cents.

 

Total revenues in the quarter came in at $1,747 million, flat with the prior-year quarter. Sales however missed the Zacks Consensus Estimate of $1,756 million. Strong overall demand in the quarter drove 5% organic revenue growth at the Engineered Systems segment and 9% at Fluids segment, offsetting weak demand in the Refrigeration & Food Equipment segment. Overall organic growth in the quarter was 3%.

 

 

 

Cost of sales edged up 0.2% to $1, 101 million in the third quarter. Gross profit dropped 0.4% year over year to $647 million. Gross margin shrunk 10 basis points (bps) year over year to 37%.

 

Selling, general and administrative expenses increased 4% to $426 million from $413 million in the prior-year quarter. Operating profit declined 8% to $221 million from $239 million reported in the year-ago quarter. Operating margin contracted 110 bps to 12.6%.

 

 

Revenues at the Engineered Systems segment remained flat at $671 million compared with the prior-year quarter. The segment’s income rose 6% year over year to 109 million.

 

Revenues at the Fluids segment were up 8% year over year to $6917 million in the quarter. The segment’s income dropped 2% year over year to $101 million.

 

The Refrigeration & Food Equipment segment’s revenues declined 12% to $386 million from $439 million in the prior-year quarter. The segment’s operating income plunged 35% year over year to $42.4 million.

 

 

Dover’s bookings at the end of the third quarter were worth $1.72 billion, up from $1.67 billion at the end of third-quarter 2017. Backlog increased 12% to $1.34 billion at the end of the reported quarter from a year ago.

 

 

Dover generated free cash flow of $206 million during the third quarter compared with cash inflow of $204 million in the prior-year quarter. Cash flow from operations came in at $244 million in the reported quarter compared with $256 million in the year-ago quarter.

 

 

Dover narrowed its adjusted earnings per share guidance for 2018 to $4.80-$4.85 from the previous guidance of $4.75-$4.85. The company projects full-year revenue growth of 2%, comprising organic growth of 3%, acquisition growth of 1% and a favorable foreign exchange impact of 1% which will be partially offset by a 3% impact from dispositions. Full-year effective tax rate is expected between 20% and 21%.

 

Dover expects cost-reduction initiatives, momentum in orders, improved performance by the Fluids segment to help offset persistently weak demand in the Refrigeration & Food Equipment segment.

 

 

 

Over the past year, Dover has underperformed the industry with respect to price. The stock has lost 12.1% and the industry fell 1.6%.

 

 

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

 

Some better-ranked stocks in the same sector include  Atkore International Group Inc. (ATKR Quick QuoteATKR - Free Report) , Donaldson Company, Inc. (DCI Quick QuoteDCI - Free Report) and EnerSys (ENS Quick QuoteENS - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Atkore has a long-term earnings growth rate of 10%. The stock has gained around 21% in a year’s time.

 

Donaldson has a long-term earnings growth rate of 11.5%. The company’s shares have rallied around 14% over the past year.

 

EnerSys has a long-term earnings growth rate of 10%. Its shares have rallied 22% in the past year.

 

 

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius