Dover Sees Stabilization

By Zacks Equity Research
On 2:06 pm EDT, Friday October 23, 2009

Industrial conglomerate Dover Corporation (NYSE: DOV - News) announced earnings of 58 cents per share for its third quarter, which was down 43% year over year but above the Zacks Consensus Estimate of 48 cents.

Quarterly revenue fell approximately 24% to $1.5 billion from $2.0 billion last year. The decline was due to a 24% drop in core business revenue and a 2% negative impact of foreign exchange, partially offset by a 2% contribution from acquisitions.

Three of the four business segments reported double-digit revenue declines. Sales in the Industrial Products, Fluid Management, and Electronic Technologies segments were down approximately 37%, 32% and 24%, respectively. Sales in the Engineered Systems division were essentially flat compared to last year.

Bookings fell 25% year over year to $1.4 billion. However, they improved 4% on a sequential basis. The company said that a majority of its businesses are showing signs of stability.

The better-than-expected earnings performance was a result of various aggressive actions taken by Dover in response to market conditions. These actions include synergy capture, pricing initiatives, capacity rationalization and a significant workforce reduction. We are pleased with the company's ability to take costs out of the system.

Dover does not expect a substantial recovery in a majority of its end-markets and distribution channels for the remainder of 2009. Full-year revenue is expected to decline 24%-26% compared to 2008. The company reiterated its full-year earnings guidance in the range of $1.75 to $2.00 per share.

Earlier this week, another machinery and equipment manufacturer, Caterpillar (NYSE: CAT - News) reported higher-than-expected earnings, having benefited from its cost reduction and capacity rationalization initiatives.

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