WF vs. BEN: Which Stock Should Value Investors Buy Now?
On Jun 30, Dover Corporation DOV was downgraded to a Zacks Rank #5 (Strong Sell). The downgrade can be attributed to concerns regarding retail refrigeration business and cost woes.
Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market.
Also, Dover’s share price movement has not been much impressive. Over the past year, the company has underperformed the industry it belongs to. The stock has declined around 11% compared with 3% growth recorded by the industry during the same time frame.
Why the Downgrade?
Dover lowered its adjusted earnings per share guidance for 2018 to $4.70-$4.85. Separation costs pertaining to Apergy and continued weakness in retail refrigeration remain headwinds for Dover. The company will incur separation costs related to Apergy between $33 million and $35 million in second-quarter 2018. This will impact the quarter’s margins.
Notably, Dover experienced temporary operating efficiencies, including parts-availability issues in retail fueling and weaker-than-expected market conditions in the retail refrigeration business. The company remains concerned that the business will continue to be impacted by tough comparisons related to last year's strong shipments and softer overall markets.
Also, analysts have become increasingly bearish on the stock over the past 60 days, with estimates moving south. The Zacks Consensus Estimate for 2018 earnings declined 11% to $4.81. In addition, the Zacks Consensus Estimate for 2019 moved down 9% to $5.42 during the same time frame.
Dover Corporation Price and Consensus
Dover Corporation Price and Consensus | Dover Corporation Quote
Furthermore, Dover carries an unimpressive VGM Score of C.
Stocks to Consider
Some better-ranked stocks in the same sector include Chart Industries, Inc. GTLS, IDEX Corp. IEX and Roper Technologies, Inc. ROP. While Chart Industries sports a Zacks Rank #1 (Strong Buy), IDEX and Roper Technologies carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chart Industries has a long-term earnings growth rate of 26.9%. Its shares have appreciated 64% over the past year.
IDEX has a long-term earnings growth rate of 11%. Its shares have increased 20% in the last year.
Roper Technologies has a long-term earnings growth rate of 12.3%. The stock has rallied 19% in a year’s time.
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