Back to top

Image: Bigstock

Dover Acquires XanTec, Expands Automation Solutions Offering

Read MoreHide Full Article

Dover Corporation (DOV - Free Report) has completed the acquisition of XanTec Steuerungs- und EDV-Technik GmbH ("XanTec") in an effort to expand automation solutions offering for the polymer processing machines. XanTec is a German manufacturer and provider of automation and control solutions for all kinds of industrial machinery, particularly focused on plastic and polymer processing machinery across the globe.

Following the buyout, XanTec has now become part of the Maag Group within Dover’s Pumps & Process Solutions segment. Maag provides integrated and customizable process technology solutions for the chemical, polymer, pharmaceutical, petrochemical and food industries globally.

XanTec has historically cooperated with Maag to deliver best-in-class integrated solutions to end customers with its state-of-the-art planning and design, programming and manufacturing processes. XanTec also offers technical monitoring of installations, start-up assistance, precautionary maintenance and remote access as well as diagnostics of systems.

Notably, the acquisition boosts Maag’s offering for automation solutions with an Internet of Things (IoT) enabled technology, while positioning it to expand presence in monitoring solutions and aftermarket remote service for the polymer processing and related markets.  

Dover has a long tradition of making successful acquisitions in diverse end markets. In 2019, the company acquired three businesses for a total consideration of $216.4 million. The company made these acquisitions to complement and expand its existing operations within the Fueling Solutions and Pumps & Process Solutions segments. Dover has invested nearly $250 million on accretive acquisitions so far this year and continues to pursue potential buyouts.

Dover’s Pumps & Process Solutions segment will gain from strong demand for food and beverage, recovery in industrial pumps and strong growth in the biopharma and hygiene market on account of the coronavirus pandemic. However, the segment’s oil and gas mid- and downstream markets, served primarily by the precision components business, will likely be affected by deferral of capital expenditure and refurbishment spending in refining and pipelined operators.

The company is poised to gain from improvements in industrial automation, robust backlog across its segments, growth in biopharma, aerospace & defense, heat exchangers and marking & coding business in the current year. In addition, the company is likely to gain from product digitization, e-commerce, new product development and inorganic investment in core business platforms. Dover has initiated several growth and productivity capital projects and aims to invest in can-forming and heat-exchanger businesses to capture growing volumes and upgrade competitive capabilities.

Moreover, Dover’s productivity and cost-reduction initiatives are likely to boost its margins and is expected to exceed the margin conversion target of 25-30% for 2020. 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, which will aid its margins in the second half of the current year.

Dover has reissued the current-year guidance on solid year-to-date margin performance and expectations of a possible improvement in demand during the September-end quarter. The company now expects adjusted earnings per share (EPS) between $5.00 and $5.25.

Dover is a producer of a wide range of specialized industrial products and manufacturing equipment. Therefore, improvement in the manufacturing sector will drive the company’s near-term growth. Per the Institute for Supply Management’s report, the U.S Purchasing Managers’ Index (PMI) came in at 56% in August, indicating consecutive three months of expansion following the pandemic-related contraction in the months of April and May. Moreover, industrial production is also showing signs of improvement after suffering a sharp decline in March and April due to the pandemic-induced crisis.

Price Performance

Dover’s shares have gained 18.8% over the past year, outperforming the industry’s growth of 8.4%.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) , IIVI Incorporated (IIVI - Free Report) and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While Silgan and IIVI sport a Zacks Rank #1 (Strong Buy), SiteOne carries a Zacks Rank of 2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Silgan has a projected earnings growth rate of 28.7% for 2020. The company’s shares have appreciated 28.4% over the past year.

IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have gained 18.1% in a year’s time.

SiteOne Landscape has an expected earnings growth rate of 15.4% for the current year. The stock has surged 61.6% over the past year.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>