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Why Is Dover Corporation (DOV) Down 1% Since Last Earnings Report?

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It has been about a month since the last earnings report for Dover Corporation (DOV - Free Report) . Shares have lost about 1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Dover Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Dover Tops Q1 Earnings Estimates, Hikes Guidance

Dover reported first-quarter 2021 adjusted earnings per share from continuing operations of $1.81, which beat the Zacks Consensus Estimate of $1.47. The figure increased 30% year over year. Improved demand and solid volume growth contributed to the company’s quarterly results.

On a reported basis, Dover delivered earnings per share of $1.61 in the March-end quarter, reflecting year-over-year growth of 33%.

Total revenues in the first quarter were up 13% year over year to $1,868 million. The top line surpassed the Zacks Consensus Estimate of $1,738 million.

Costs and Margins

Cost of sales rose 9.7% year over year to $1,146 million in the reported quarter. Gross profit increased 18% year over year to $722 million. Gross margin came in at 38.6% compared with the year-ago quarter’s 36.9%.

Selling, general and administrative expenses increased 5.7% to $409 million from the prior-year quarter. Adjusted EBITDA increased 29.2% year over year to $424.4 million. Adjusted EBITDA margin was 22.7% in first-quarter 2021 compared with the last-year quarter’s 19.9%.

Segmental Performance

The Engineered Products segment revenues were up 5% year over year to $428 million in first-quarter 2021. The segment’s adjusted operating income improved 5.8% year over year to $73 million.

The Fueling Solutions segment revenues climbed 8.2% to $389.7 million from the year-earlier quarter’s $359.9 million. The segment’s adjusted operating income was up 21.8% year on year to $67 million.

The Imaging & Identification segment revenues increased 10.5% year over year to $284 million. The segment’s adjusted operating income grew 11.5% year over year to $58 million.

The Pumps & Process Solutions revenues climbed 23.5% year over year to $394 million during the first quarter. The adjusted operating income for the segment came in at $121.6 million compared with the year-ago quarter’s $69.9 million.

The Refrigeration & Food Equipment segment’s revenues increased to $372 million from the year-earlier quarter’s $312 million. The segment’s adjusted operating income totaled $38 million, indicating a year-over-year jump of 111%.

Bookings and Backlog

Dover’s bookings at the end of the first quarter were worth $2.33 billion compared with the prior-year quarter’s $1.78 billion. Backlog increased 39.4% year over year to $2.22 billion at the end of the reported quarter.

Financial Position

The company generated free cash flow of $146 million in the first quarter compared with the $36 million witnessed in the year-ago quarter. Cash flow from operations amounted to $177 million in the March-end quarter compared with the year-ago quarter’s $76 million.

Outlook

Backed by stellar first-quarter 2021 results and the current demand scenario, the company is raising its adjusted earnings per share (EPS) and sales guidance for the current year. Dover now expects adjusted EPS to lie between $6.75 and $6.85, up from the prior projection of $6.25 and $6.45. Revenues are projected to register growth of 10-12% in 2021 compared with the earlier estimate of an 8-10% increase. The company is poised to gain from strong end market demand, bookings rates and robust backlog.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 15.25% due to these changes.

VGM Scores

At this time, Dover Corporation has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Dover Corporation has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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