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Here's Why You Should Add Dover Stock to Your Portfolio Now

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Dover Corporation (DOV - Free Report) is poised to perform well, driven by an upbeat outlook, improved performance by the Engineered Systems and Fluids segments, strong demand, solid backlog and cost-reduction initiatives.

Dover currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.

Factors Favoring Dover

Sound Q3 Results

Dover’s third-quarter 2019 adjusted earnings per share improved 18% year over year to $1.60. Total revenues in the quarter came in at $1,825 million, up 4.5% from the prior-year quarter, backed by organic and acquisition growth of 5.6% and 1%, respectively. The company beat the Zacks Consensus Estimate on both the metrics.

Upbeat Guidance

Dover’s adjusted earnings per share guidance for 2019 lie in the range of $5.82-$5.85. The mid-point of the guidance indicates year-over-year growth of 17%. Through the balance of 2019, the Engineered Systems and Fluids segments’ impressive performance, benefits from cost-containment actions, and footprint-optimization projects and retail refrigeration will help negate the impact of soft demand in the Refrigeration & Food Equipment segment.

Positive Earnings Surprise History

Dover has an impressive surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, the average beat being 6.70%.

Price Performance



The stock has gained around 29.8% over the past year, outperforming the industry’s growth of 18.3%.

Strong Earnings Growth Prospect

The Zacks Consensus Estimate for Dover’s 2019 earnings is currently pegged at $5.85, indicating an improvement of 17.7% from the year-ago quarter. The same for 2020 stands at $6.32, suggesting year-over-year growth of 8.01%. The stock also has long-term expected earnings per share growth rate of 11.5%.

Underpriced

Looking at Dover’s price-to-earnings ratio, shares are underpriced at the current level, which seems to be attractive for investors. The company has a forward 12 month P/E ratio of 17.6, which is below the industry average of 20.4.

Growth Drivers in Place

Dover continues its efforts to simplify its portfolio and increase focus on the markets with growth prospects. In sync with this, Dover successfully completed the spin-off of its upstream energy businesses. Following the spin-off, the company no longer has the Energy segment and is aligned into three reportable segments. Consequently, Dover's core platforms, which compete in lower volatility industrial markets, will be well positioned to provide a strong foundation for reinvestment, long-term sustainable revenues, earnings growth and strong free cash flow generation.

The company has executed restructuring programs to better align costs and operations with the current market conditions through targeted facility consolidations, headcount reduction and other measures.

Dover has a history of making successful acquisitions in diverse end markets. The company will also gain from product digitization, e-commerce, new product development, and inorganic investment in core business platforms.

Bottom Line

Investors might want to hold on to the stock, at present, as it has ample prospects for outperforming peers in the near future.

Other Stocks to Consider

Some better-ranked stocks in the Industrial Products sector are Northwest Pipe Company (NWPX - Free Report) , Tennant Company (TNC - Free Report) and Casella Waste Systems, Inc. (CWST - Free Report) . While Northwest Pipe and Tennant sport a Zacks Rank #1, Casella Waste Systems carries a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northwest Pipe has an expected earnings growth rate of 15.8% for the current year. The stock has appreciated 35% in a year’s time.

Tennant has a projected earnings growth rate of 29.82% for 2019. The company’s shares have rallied 32% over the past year.

Casella Waste Systems has an estimated earnings growth rate of 37.7% for the ongoing year. The company’s shares have gained 31% in the past year.

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