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Dover Corporation ((DOV - Analyst Report) reported its third-quarter 2012 earnings of $1.30 per share, beating the Zacks Consensus Estimate of $1.27. Results inched up 10.2% from the prior-year quarter’s earnings of $1.18 per share.
On the reported basis, earnings were $1.32 per share compared with the prior-year quarter’s earnings of $1.19. The third-quarter 2012 included a tax benefit of 2 cents while the year-ago quarter included a tax benefit of 1 cent.
Total revenues were $2.209 billion, improving 3% year over year, missing the Zacks Consensus Estimate of $2.249 billion. The revenue increase included an organic growth of 1% and increase from acquisitions by 4%, partially offset by negative impacts of 2% from foreign currency.
Cost of sales increased 2.2% to $1.36 billion versus $1.33 billion in the year-ago quarter. Gross profit of the company went up 5% year over year to $846.9 million. Consequently, gross margin expanded 60 basis points (bps) to 38.3% in the quarter.
Selling and administrative expenses remained flat at $476.6 million in the quarter. Operating profit soared 12.4% to $370.4 million. Operating margin was 16.8%, expanding 140 bps year over year.
Revenues in the Communication Technologies segment dropped 2.2% to $396.5 million. The segment’s income, however, rose 19.2% to $63.7 million, and operating margin jumped 290 bps year over year to 16.1%.
Energy revenues increased 10.1% to $562.3 million in the quarter. The segment’s operating income shot up 11% to $139 million. The segment’s operating margin expanded 20 bps year over year to 24.7% in the reported quarter.
Revenues in the Engineered Systems segment increased 8.4% to $892.1 million in the quarter. The segment’s income surged 14.9% to $144.2 million. Operating margin of the segment expanded 100 bps year over year to 16.2%.
Revenues of Printing & Identification segment fell 10.6% to $358.1 million from $400.5 million in the prior-year quarter. The segment reported operating income of $51.4 million, down 13.5% from $59.4 million in last year’s quarter, contracting the operating margin by 40 bps year over year to 14.4%.
Bookings and Backlog
The company ended the third quarter with $2.079 billion worth of bookings versus $2.068 billion at the end of the third quarter 2011. Backlog of the company increased to $1.540 billion at end of the reported quarter from $1.449 billion in third quarter 2011.
Free Cash Flow
Dover generated free cash flow of $229.7 million in the reported quarter compared with $311.6 million in the year-ago quarter.
Outlook for 2012
Dover expects revenue growth of 7% down from the range of 8%-10%. Organic revenue growth will contribute 3% while acquisitions will add 4% to the revenue growth. It expects earnings to lie in the band of $4.55-$4.65 down from the previous range of $4.70-$4.85.
Dover is experiencing revenue challenges in the Handset and Electronic markets. Moreover, the uncertainty in global economic condition adds to the woe.
Dover faces stiff competition from Cooper Industries plc ( and Weatherford International Ltd. ((WFT - Analyst Report) among others. The company retains a short-term Zacks #4 Rank (Sell). We have a long–term Neutral recommendation on the stock.