Dover (DOV) Beats on Q1 Earnings, Suspends 2020 Guidance
Dover Corporation DOV reported first-quarter 2020 adjusted earnings per share from continuing operations of $1.39. The figure improved 12% from the prior-year quarter’s $1.24 per share. Earnings also beat the Zacks Consensus Estimate of $1.18. Despite lower revenues in the quarter thanks to the impact of the coronavirus pandemic, Dover’s productivity initiatives, cost-containment efforts and prudent debt refinancing undertaken in late 2019 were instrumental in driving bottom-line growth.
On a reported basis, Dover delivered earnings per share of $1.21 in the March-end quarter, reflecting a year-over-year jump of 68.1%.
Total revenues in the first quarter came in at $1,656 million, marking a decline of 4% from the year-ago quarter’s $1,725 million. The revenue figure missed the Zacks Consensus Estimate of $1,665 million. Pandemic-related challenges, mainly in China and Italy, along with the challenging trading conditions in the capital goods and textile sectors dented the company’s revenues in the reported quarter.
Costs and Margins
Cost of sales fell 5.2% year over year to $1,044 million during the January-March quarter. Gross profit edged down 1.8% year over year to $612.2 million.
Selling, general and administrative expenses slipped 5.1% to $387 million from the $409 million reported in the prior-year quarter. Operating profit increased to $225 million from the year-ago quarter’s $168 million.
Dover Corporation Price, Consensus and EPS Surprise
Dover Corporation price-consensus-eps-surprise-chart | Dover Corporation Quote
Segmental Performance
The Engineered Products segment revenues went down to $408 million from the $419 million recorded in the year-ago quarter. The segment’s income increased 3% year over year to $69 million.
The Fueling Solutions segment revenues declined to $360 million from the $373 million recorded in the prior-year quarter. The segment’s income jumped 43.2% year over year to $53.5 million.
The Imaging & Identification segment revenues went down to $257 million from the $268 million recorded in the comparable period last year. The segment’s income declined 8% year over year to $51.5 million.
The Pumps & Process Solutions revenues dropped 3.2% year over year to $319.5 million in the quarter. The segment income came in at $66 million compared with the year-ago quarter’s $15 million.
The Refrigeration & Food Equipment segment’s revenues declined 6.9% to $312 million from the year-earlier quarter’s $335 million. The segment’s operating income decreased 5.5% year over year to $23.5 million.
Bookings and Backlog
Dover’s bookings at the end of the first quarter were worth $1.78 billion, flat year over year. Backlog increased 12% year over year to $1.59 billion at the end of the reported quarter.
Financial Position
Dover generated free cash flow of $35.7 million in the reported quarter compared with cash outflow of $12.6 million in the prior-year quarter. Cash flow from operations came in at $75.9 million in the March-end quarter compared with the year-ago period’s $24.5 million.
Outlook
Dover has withdrawn its current-year revenue and adjusted EPS guidance on account of the uncertainty related to the coronavirus pandemic and its negative impact on the demand environment.
The company’s financials have been affected by the pandemic and related measures imposed by governments around the world as well as increased business uncertainty.
Share Price Performance
Dover, along with Tennant Company TNC and Broadwind Energy, Inc. BWEN, are part of the Manufacturing – General Industrial industry. Dover’s shares have lost 12.2% over the past year compared with the industry’s loss of 17.2%.
Zacks Rank and A Stock to Consider
Dover currently carries a Zacks Rank #4 (Sell).
A better-ranked stock in the Industrial Products sector is Sharps Compliance Corp. SMED, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Sharps Compliance has an estimated earnings growth rate of 800% for 2020. In a year, the company’s shares have soared 114%.
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