As you might know, Dover Corporation (NYSE:DOV) just kicked off its latest second-quarter results with some very strong numbers. Dover beat earnings, with revenues hitting US$1.5b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 16%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the consensus from Dover's 14 analysts is for revenues of US$6.49b in 2020, which would reflect a discernible 3.9% decline in sales compared to the last year of performance. Statutory earnings per share are expected to dip 6.2% to US$4.38 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$6.43b and earnings per share (EPS) of US$4.12 in 2020. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 8.7% to US$116, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Dover, with the most bullish analyst valuing it at US$127 and the most bearish at US$100.00 per share. This is a very narrow spread of estimates, implying either that Dover is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Dover's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 3.9% revenue decline a notable change from historical growth of 0.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.4% next year. It's pretty clear that Dover's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Dover's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Dover's revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on Dover. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Dover analysts - going out to 2024, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Dover you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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