It has been about a month since the last earnings report for Dover (DOV). Shares have lost about 3.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Dover due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Dover Earnings & Revenues Top Estimates in Q1, Up Y/Y
Dover reported first-quarter 2019 adjusted earnings per share from continuing operations of $1.24. The figure improved 37.7% from the prior-year quarter’s 90 cents. Earnings beat the Zacks Consensus Estimate of $1.12, delivering positive surprise of 10.7%.
On a reported basis, Dover posted earnings per share of 72 cents in the quarter, up 2.8% year over year. Earnings included acquisition-related amortization costs of 18 cents and rightsizing costs of 2 cents.
Total revenues in the reported quarter came in at $1,725 million, reflecting year-over-year increase of 5.3%. Revenues also beat the Zacks Consensus Estimate of $1,687 million, backed by organic growth of 8.3% and acquisition growth of 0.5%. This was partly offset by a 3.4% unfavorable foreign-exchange impact.
Costs and Margins
Cost of sales grew 6.4% to $1,101 million in the first quarter. Gross profit increased 3.4% year over year to $623 million.
Selling, general and administrative expenses slipped 6.2% to $408 million from $435 million reported in the prior-year quarter. Operating profit marginally improved to $168 million from the year-ago quarter’s reported tally of $167 million.
The Engineered Systems segment revenues improved 2.4% to $687 million from $671 million recorded in the year-ago quarter. The segment’s income increased 20.5% year over year to $123 million.
The Fluids segment revenues were up 12% year over year to $703 million in the quarter. The segment’s income declined 22.3% year over year to $52 million. Excluding the loss on sale of assets related to Finder, segment’s income surged 47.7% year over year.
The Refrigeration & Food Equipment segment’s revenues edged down 1.1% to $334 million from the year-ago quarter’s reported figure of $338 million. The segment’s operating income also dropped 17.2% year over year to $24 million.
Bookings and Backlog
Dover’s bookings at the end of the first quarter were worth $1.78 billion, down from $1.82 billion recorded at the end of first-quarter 2018. Backlog increased 6% year over year to $1.42 billion at the end of the reported quarter.
Dover generated a negative free cash flow of $12.5 million during the Mar-end quarter compared with $29 million in the prior-year quarter. Cash flow from operations came in at $24.5 million in the first quarter compared with $15.5 million reported in the year-ago period.
Dover maintained its adjusted earnings per share guidance of $5.65-$5.85 for full-year 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Dover has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Dover has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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