Dover (DOV) Earnings Beat Estimates in Q3, Lowers FY22 View
Dover Corporation DOV reported third-quarter 2022 adjusted earnings per share (EPS) from continuing operations of $2.26, beating the Zacks Consensus Estimate of $2.20. The bottom line increased 14% year over year. Strong demand and robust backlog rates coupled with improving price-cost dynamics helped offset the impact of ongoing input shortages, inflationary cost pressure and foreign currency translation.
On a reported basis, Dover delivered earnings of $2.00 per share in the quarter, up 10% year over year.
Total revenues in the third quarter increased 7% year over year to $2,158 million. The top line missed the Zacks Consensus Estimate of $2,160 million. Organic growth was 9% in the quarter.
Dover Corporation Price, Consensus and EPS Surprise
Dover Corporation price-consensus-eps-surprise-chart | Dover Corporation Quote
Costs and Margins
Cost of sales rose 9.5% year over year to $1,385 million in the reported quarter. Gross profit was up 2.4% year over year to $773 million. The gross margin was 35.8% compared with the year-ago quarter’s 37%.
Selling, general and administrative expenses were down 2.5% to $402 million from the prior-year quarter’s tally. Adjusted EBITDA increased 9% year over year to $493 million. Adjusted EBITDA margin was 22.8% in the quarter compared with the prior-year quarter’s 22.4%.
Segmental Performance
The Engineered Products segment’s revenues were up 15% year over year to $516 million in the quarter. The segment’s adjusted EBITDA surged 30% year over year to $97 million.
The Clean Energy & Fueling segment’s revenues came in at $458 million compared with the prior-year quarter’s $411 million. The segment’s adjusted EBITDA was $97 million, up 12% from the prior-year quarter’s $86 million.
The Imaging & Identification segment’s revenues moved down 3.5% year over year to $282 million. The segment’s adjusted EBITDA rose 4.5% year over year to $78 million.
The Pumps & Process Solutions segment’s revenues decreased 1.1% year over year to $434 million in the third quarter. The adjusted EBITDA of the segment totaled $139 million, a 13% drop from the year-ago quarter’s figure of $160 million.
The Climate & Sustainability Technologies segment’s revenues increased to $463 million from $429 million reported in the year-ago quarter. The segment’s adjusted EBITDA totaled $82 million, a 44% improvement from the $57 million reported in third-quarter 2021.
Bookings and Backlog
Dover’s bookings at the end of the third quarter were worth $2.06 billion compared with the prior-year quarter’s $2.29 billion. Backlog decreased 2% year over year to $3.17 billion at the end of the reported quarter.
Financial Position
The company had a free cash flow of $199 million in the third quarter of 2022 compared with the year-ago quarter’s $303 million. Cash flow from operations amounted to $265 million in the quarter under review compared with the prior-year quarter’s $351 million.
Outlook
Dover expects adjusted EPS between $8.40 and $8.60 for 2022, lower than its previously provided guidance of $8.45-$8.65. It expects revenue growth in the range of 7% to 9% and organic revenue growth of 8-10%.
Even though demand remains strong considering the ongoing macroeconomic uncertainty, Dover has decided to lower output in several businesses. This will help draw down inventory balances. Meanwhile, the company will also be initiating cost control measures wherever necessary.
Price Performance
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Dover’s shares have declined 28.2% in the past year compared with the industry’s fall of 18.1%.
Zacks Rank and Stocks to Consider
Dover currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Tenaris TS, O-I Glass, Inc. OI and Reliance Steel & Aluminum Co. RS. While TS sports a Zacks Rank #1, OI and RS carries a Zacks Rank #2 at present.
Tenaris delivered a trailing four-quarter earnings surprise of 34%, on average. The Zacks Consensus Estimate for the company for 2022 indicates a year over year growth of around 120%. The estimate has moved up 3% in the past 60 days. The TS stock has risen 23.5% in the past year.
O-I Glass has a trailing four-quarter earnings surprise of 17.4%, on average. The Zacks Consensus Estimate for OI’s 2022 earnings has moved north by 1% in the past 60 days. The estimate indicates a year-over-year growth of 19.7%. In a year, OI has appreciated 7%.
Reliance Steel & Aluminum’s earnings surprise in the last four quarters was 13.4%, on average. It has an expected earnings growth rate of 27.9% for fiscal 2022. In the past 60 days, the earnings estimates has moved up 0.1% over the past 60 days. The RS stock has gained 21% in the past year.
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