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Factors That Are Likely to Impact Dover's (DOV) Q2 Earnings

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Dover Corporation (DOV - Free Report) is anticipated to report second-quarter 2018 results on Jul 19, before the opening bell. Dover is expected to report year-over-year growth in its bottom-line in the to-be-reported quarter despite a drop in top-line, as per our projections.
 
In first-quarter 2018, Dover reported adjusted earnings per share of $1.16, which surged 26% year over year. Total revenues increased 6% year over year to $1.9 billion in the quarter driven by acquisitions, organic growth and favorable impact from foreign exchange, partly offset by impact from dispositions. The company beat the Zacks Consensus Estimate on both counts.
 
Notably, Dover surpassed the Zacks Consensus Estimate in the last four quarters, delivering an average surprise of 4.7%. Let’s see how things are shaping up prior to this announcement.
 
Dover Corporation Price and EPS Surprise
 
Dover Corporation Price and EPS Surprise

Dover Corporation price-eps-surprise | Dover Corporation Quote

Earnings Whispers

Our proven model cannot conclusively predict if Dover will beat the Zacks Consensus Estimate this time. That’s because it doesn’t have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks ESP: The company has an Earnings ESP of +0.39%.
 
Zacks Rank: Dover carries a Zacks Rank #5 (Strong Sell), which reduces the predictive power of ESP. Notably, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
 
Factors at Play
 
Dover’s bookings at the end of the first quarter 2018 were worth $2.11 billion, up from $2.03 billion reported at the end of first-quarter 2017. Organic bookings increased across all of Dover’s businesses with the exception of Refrigeration & Food Equipment. Backlog increased to $1.41 billion at the end of the reported quarter from $1.29 billion at the year-ago quarter end. Backed by strong bookings growth, the company is poised for an improved second-quarter 2018 performance.
 
The Zacks Consensus Estimate for total sales of $1.8 billion for the quarter indicates a decline of 10.7% from the prior-year quarter.
 
The Zacks Consensus Estimate for Dover’s earnings has gone down 6% over the last 30 days and is pegged at $1.22 for the second quarter. The earnings estimate reflects year-over-year growth of around 17%.
 
Coming to the segments, the Zacks Consensus Estimate for Refrigeration and Food Equipment segment’s net sales is pegged at $408 million for the quarter to be reported, representing year-over-year decline of 4%. Retail refrigeration in the second quarter will continue to be impacted by tough comparisons related to last year's strong shipments and softer overall markets. The segment’s operating earnings is projected to be around $59 million, down 11% from $66 million in the prior-year quarter.
 
Strong bookings in Engineered Systems and Fluids and strong book-to-bill will drive organic revenues in the to-be-reported quarter. The Zacks Consensus Estimate indicates that Dover’s Engineered Systems segment’s revenues will reach $695 million in the second quarter, representing a year-over-year improvement of 6%. The estimate for operating earnings for the segment is currently at $116 million, a 8% rise from the prior-year quarter.
 
For the Fluids segment, the Zacks Consensus Estimate for earnings is pegged at $97 million for the quarter, representing year-over-year increase of 31% aided by strong growth in the Pumps as well as hygienic and pharma businesses.
 
However, Dover expects to incur separation costs related to Apergy in the second quarter of 2018 in between $33 million and $35 million. This will impact the quarter’s margins.
 
 
Dover has underperformed the industry over the past year. Shares of the company have dropped 11% while the industry gained 4%.
 
Stocks to Consider
 
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
 
HD Supply Holdings, Inc. (HDS - Free Report) has an Earnings ESP of +2.07% and a Zacks Rank #2 (Buy). The stock has gained 46% in a year’s time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
Roper Technologies, Inc. (ROP - Free Report) has an Earnings ESP of +0.32% and a Zacks Rank #2. Its shares have gained 20% in the past year.
 
Cintas Corporation (CTAS - Free Report) has an Earnings ESP of +0.88% and a Zacks Rank #3. The company’s shares have been up 55% during the past year.
 
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