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Why Hold Strategy is Apt for Dover (DOV) Stock Right Now
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Dover Corporation (DOV - Free Report) is gaining from solid end-market demand across all segments as well as robust bookings and backlogs. Moreover, focus on cost-reduction actions, margin-improvement plan and acquisitions are also stoking growth.
The company currently carries a Zacks Rank #3 (Hold) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) 2 (Buy) or 3, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a trailing four-quarter average earnings surprise of 21.35%.
Solid Growth Expectations & Positive Estimate Revisions: The Zacks Consensus Estimate for the company’s current-year earnings is currently pegged at $6.98, suggesting year-over-year growth of 23.10%. The same for 2022 is pinned at $7.58, indicating a year-over-year jump of 8.6%. The company has a long-term projected 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 trailing P/E ratio of 24.9, which is below the industry average of 33.8.
Price Performance
Dover’s shares have gained 21.1% so far this year, outperforming the industry’s growth of 14%.
Image Source: Zacks Investment Research
Growth Drivers in Place
Dover has been gaining from robust order trends across majority of its businesses, lately. Order trends were particularly healthy in biopharma connectors and pumps, plastics and polymer processing, food retail, industrial pumps, refuse collection, and automotive-exposed markets during the March-end quarter. Backed by this momentum, the company projects sales growth of 10-12% in the current year compared with the earlier estimate of an 8-10% increase. Dover now estimates adjusted earnings per share to lie between $6.75 and $6.85 for 2021, up from the prior projection of $6.25 and $6.45.
In the Engineered Products segment, demand for engineered products, vehicle service and industrial automation has been solid. Aerospace and defense will gain from various government programs in 2021. The Fueling Solutions segment continues to grow on productivity and pricing actions as well as constructive demand trends. Moreover, positive order trends in vehicle wash markets as well as systems and software recovery in underground businesses will drive the segment’s results this year. The Imaging & Identification segment will gain from healthy demand for consumables and fast-moving consumer goods solutions.
In the Pumps & Process Solutions segment, elevated demand for food and beverage, rapid recovery in industrial pumps, and strong growth in biopharma and hygiene market are likely to be conducive to the segment’s performance in 2021. In the Refrigeration & Food Equipment segment, large backlog and high order rates in the food retail business will aid the company. Also, its heat exchanger and Belvac business is seeing strong order rates. Dover is investing in capacity and new capabilities in these two businesses to capture growth.
Dover’s productivity and cost-control initiatives continue to drive bottom-line growth. It executed restructuring programs to better align the costs and operations with current market conditions. The company has initiated several growth projects, and started investments in can forming and heat exchanger businesses to capture growing volumes and upgrade competitive capabilities. Moreover, Dover has a long tradition of making successful acquisitions in diverse end markets.
Bottom Line
Investors might want to hold on to the stock, at present, as it has ample positive prospects of outperforming peers in the near future.
Stocks to Consider
A few better-ranked stocks in the Industrial Products sector are Greif, Inc. (GEF - Free Report) , Lindsay Corporation (LNN - Free Report) and Pentair plc (PNR - Free Report) . All of these stocks sport a Zacks Rank #1, at present.
Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained around 29.3%, year to date.
Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal. Year to date, the company’s shares have increased 29.1%.
Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated around 29%, so far this year.
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Image: Bigstock
Why Hold Strategy is Apt for Dover (DOV) Stock Right Now
Dover Corporation (DOV - Free Report) is gaining from solid end-market demand across all segments as well as robust bookings and backlogs. Moreover, focus on cost-reduction actions, margin-improvement plan and acquisitions are also stoking growth.
The company currently carries a Zacks Rank #3 (Hold) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) 2 (Buy) or 3, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a trailing four-quarter average earnings surprise of 21.35%.
Solid Growth Expectations & Positive Estimate Revisions: The Zacks Consensus Estimate for the company’s current-year earnings is currently pegged at $6.98, suggesting year-over-year growth of 23.10%. The same for 2022 is pinned at $7.58, indicating a year-over-year jump of 8.6%. The company has a long-term projected 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 trailing P/E ratio of 24.9, which is below the industry average of 33.8.
Price Performance
Dover’s shares have gained 21.1% so far this year, outperforming the industry’s growth of 14%.
Growth Drivers in Place
Dover has been gaining from robust order trends across majority of its businesses, lately. Order trends were particularly healthy in biopharma connectors and pumps, plastics and polymer processing, food retail, industrial pumps, refuse collection, and automotive-exposed markets during the March-end quarter. Backed by this momentum, the company projects sales growth of 10-12% in the current year compared with the earlier estimate of an 8-10% increase. Dover now estimates adjusted earnings per share to lie between $6.75 and $6.85 for 2021, up from the prior projection of $6.25 and $6.45.
In the Engineered Products segment, demand for engineered products, vehicle service and industrial automation has been solid. Aerospace and defense will gain from various government programs in 2021. The Fueling Solutions segment continues to grow on productivity and pricing actions as well as constructive demand trends. Moreover, positive order trends in vehicle wash markets as well as systems and software recovery in underground businesses will drive the segment’s results this year. The Imaging & Identification segment will gain from healthy demand for consumables and fast-moving consumer goods solutions.
In the Pumps & Process Solutions segment, elevated demand for food and beverage, rapid recovery in industrial pumps, and strong growth in biopharma and hygiene market are likely to be conducive to the segment’s performance in 2021. In the Refrigeration & Food Equipment segment, large backlog and high order rates in the food retail business will aid the company. Also, its heat exchanger and Belvac business is seeing strong order rates. Dover is investing in capacity and new capabilities in these two businesses to capture growth.
Dover’s productivity and cost-control initiatives continue to drive bottom-line growth. It executed restructuring programs to better align the costs and operations with current market conditions. The company has initiated several growth projects, and started investments in can forming and heat exchanger businesses to capture growing volumes and upgrade competitive capabilities. Moreover, Dover has a long tradition of making successful acquisitions in diverse end markets.
Bottom Line
Investors might want to hold on to the stock, at present, as it has ample positive prospects of outperforming peers in the near future.
Stocks to Consider
A few better-ranked stocks in the Industrial Products sector are Greif, Inc. (GEF - Free Report) , Lindsay Corporation (LNN - Free Report) and Pentair plc (PNR - Free Report) . All of these stocks sport a Zacks Rank #1, at present.
Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained around 29.3%, year to date.
Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal. Year to date, the company’s shares have increased 29.1%.
Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated around 29%, so far this year.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
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