Back to top

Analyst Blog

Recently, Dover Corporation (DOV - Analyst Report) announced its decision to acquire the Maag Group, the global leader in external gear pump technology and engineered solutions. The value of the transaction is undisclosed as yet.

Maag Group will be incorporated in the Downers Grove of Pump Solutions Group (PSG) within the Fluid Solutions platform of Engineered Solution segment of Dover. Management expects this acquisition will help the company elevate the fluid position by increasing Pump Solution Group’s product portfolio and technology in the chemicals and petrochemicals market.  

The deal which is expected to be closed around the first quarter of 2012 will be dilutive to earnings per share of 2012 due to integration and acquisition related costs. With this acquisition, Dover will be able to expand its geographical footprints and serve a wider customer base.

Engineered Solution segment contributed 36% of total revenue in the fourth quarter of 2011 while Fluid Solutions platform accounted for about 22% of Engineered Solutions segment in the fourth quarter of 2011. The Engineered Solution segment’s contribution is the highest to the total revenue.

In the recently announced results Dover saw earnings of $1.07 per share, increasing 19% from the prior-year quarter earnings of 90 cents. Total revenue improved 15% year over year to $2.0 billion which included a 6% organic growth and 9% from acquisitions.

Dover continues to pursue strategic acquisitions in a bid to improve its product offering and complement its organic growth strategy. In 2011, Dover indulged in acquisitions worth $1.26 billion within its five targeted markets of Energy, Fluid Solutions, Communication Components, Product ID and Food & Refrigeration. However, this inevitably exposes the company to certain acquisition related risks.

Moreover, in the Fluid Management segment, the Energy platform is subject to risks due to the volatility of energy prices, although overall demand is more directly related to depletion of rates and global economic conditions and related energy demands.

Further, certain Dover businesses manufacture products that are used in or related to residential and commercial construction. These products can be adversely affected by a prolonged downturn in new housing starts and other construction markets.

Based in Zurich, Switzerland, Maag Group is the market leader of external pump technology and engineered integration solutions for the polymer, plastic, chemical and petrochemical industries. It has operations in countries like Switzerland, Germany, U.S., Italy and China. In addition, it also works as sales support in offices globally.

Based in New York, Dover Corporation is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. It operates primarily in the U.S. and has subsidiaries and affiliates in Canada, France, Germany, the Netherlands, Sweden, China, and the United Kingdom. Dover caters to a diverse clientele, primarily spread over the Americas, Europe and Asia.

Currently, the shares of Dover Corporation maintain a Zacks #3 Rank (short-term Hold recommendation). It faces competition from Cooper Industries plc , Ingersoll-Rand Plc (IR - Analyst Report) and Weatherford International Ltd. (WFT - Analyst Report). The Zacks Consensus Estimate for the first quarter 2012 earnings is $1.01.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.80 +7.04%
SIGNET JEWE… SIG 115.20 +6.25%
BANCO DO BR… BDORY 14.74 +5.66%
TRAVELCENTE… TA 11.66 +4.76%
AIR INDUSTR… AIRI 9.99 +4.15%