Shares of Dover Corporation (DOV) attained a new 52-week high of $85.93 during intraday trading on Apr 3, finally closing at $85.39 at the end of trading yesterday.
Shares of this diversified machinery producer have delivered a solid one-year return of about 47.6%, outperforming the S&P 500 return of 22.9%. The average volume of shares traded over the last 3 months was roughly 1,634K. Dover has a market cap of $14.5 billion with long-term expected earnings growth of 11%.
Dover Corporation’s share price and estimates have been on the rise since it reported fourt-quarter 2013 results on Jan 30. The company reported fourth-quarter adjusted earnings of $1.28 per share, up 17% from the prior-year quarter’s earnings of $1.09 per share. Organic growth across all segments, strength in refrigeration and food equipment, fast moving consumer goods, fluids, drilling and downstream energy markets drove the year-over-year increase.
Dover ended the year with bookings worth $8.7 billion versus $8.1 billion at the end of fiscal 2012. Backlog increased 5% year over year to $1.55 billion at the end of the reported quarter.
Dover expects earnings in the range of $4.60–$4.80 per share. The company projects revenue growth of 5–6% in fiscal 2014. Geographic expansion, product innovation, bookings and orders growth as well as enhanced customer service add to the company’s growth story.
Dover’s expansion has been mainly driven by acquisitions. In fiscal 2013, it has made 10 acquisitions for $323 million. Most notable among them was the acquisition of Italy-based Finder for $145 million, which will strengthen the position of Dover’s Pump Solutions Group and increase the company’s global footprint. In early 2014, Dover acquired Italy-based MS Printing Solutions S.r.l which will enable it to expand beyond fast moving consumer goods and industrial markets to the textile sector.
In order to simplify its business profile and increase focus on key industrial growth spaces, Dover signed a definitive agreement to sell DEK Printing Machines unit (:DEK) to Hong Kong-listed ASM Pacific Technology. The sale will likely close by mid-2014 and is expected to generate cash proceeds of $170 million, apart from a contingent consideration of $30 million that is subject to customary post-closing adjustments.
In addition, Dover has realigned its businesses into a new segment structure with four segments: Dover Energy, Dover Engineered Systems, Dover Fluids and Dover Refrigeration & Food Equipment. This will facilitate it to focus better on key markets, thereby improving productivity.
Other Stocks to Consider
Dover currently retains a short-term Zacks Rank #3 (Hold). Some better-performing stocks in the sector include Kadant Inc. (KAI), Altra Industrial Motion Corp. (AIMC) and Broadwind Energy, Inc. (BWEN). While Kadant carries a Zacks Rank #1 (Strong Buy), Altra Industrial Motion and Broadwind Energy have a Zacks Rank #2 (Buy).