Dover Corporation (DOV), an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment, is slated to report second-quarter fiscal 2014 results on Jul 17. In the last quarter, it posted a negative surprise of 0.98%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Dover's total bookings increased 5% year over year to $2 billion in the first quarter, driven by higher bookings in Fluids (20%), Engineered Systems (11%), and Refrigeration & Food Equipment (2%) segments. Backlog also grew 7% year over year with a book-to-bill ratio of 1.0x. This will help boost revenues in the second quarter.
Dover expects earnings in the range of $4.60–$4.80 per share for 2014. It also reiterates revenue growth of 6%–7% in fiscal 2014 with organic revenue growth of 3%–4%. The company expects full-year segment margin of around 18%.
Dover’s expansion has been mainly driven by acquisitions. Its acquisition of Italy-based MS Printing Solutions will help Dover in expanding beyond the fast moving consumer goods and industrial markets and enter into the textile market. Moreover, last year, Dover acquired Italy-based Finder for $145 million to strengthen the position of Pump Solutions Group in the energy market and enhance its global footprint.
In addition, Dover has completed the spin-off of Knowles Corporation and the sale of its DEK Printing Machines unit. This will simplify Dover’s business profile, enabling it to focus on its key growth spaces - Energy, Fluids, Refrigeration & Food Equipment, and Engineered Systems.
Our proven model does not conclusively show that Dover is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: Dover has an earnings ESP of 0.00%. This is because the Most Accurate estimate stands at $1.28 per share, in line with the Zacks Consensus Estimate.
Zacks Rank #3 (Hold): Dover has a Zacks Rank #3 which when combined with a 0.00% ESP makes surprise prediction difficult.
Stocks that Warrant a Look
Here are other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings surprise:
Caterpillar Inc. (CAT) has an earnings ESP of +0.67% and a Zacks Rank #1 (Strong Buy).
Nordson Corporation (NDSN) has an earnings ESP of +0.89% and a Zacks Rank #2 (Buy).
Kennametal Inc. (KMT) has an earnings ESP of +1.12% and a Zacks Rank #3 (Hold).