Dover Corporation DOV is set to release first-quarter 2020 results, before the opening bell on Apr 16.
A Sneak Peek at Q4 Results
Dover reported mixed results for fourth-quarter 2019, wherein earnings beat the Zacks Consensus Estimate and improved year over year. The company’s sales missed estimates as well as declined year on year. The company delivered a positive earnings surprise in all of the trailing four quarters, the average beat being 5.4%.
Which Way Are Estimates Treading?
The Zacks Consensus Estimate for Dover’s first-quarter earnings is currently pinned at $1.38, reflecting year-over-year growth of 11.3%. The same for total revenues is pegged at $1,710 million, indicating a decline of 0.9% from the prior-year quarter. The Zacks Consensus Estimate for the March-end quarter’s earnings moved south over the past 30 days.
Let’s see how things have shaped up prior to this announcement.
Dover’s first-quarter 2020 results are likely to reflect benefits from solid order backlog across all business segments as well as productivity and cost initiatives.
The company has executed restructuring programs to better align costs and operations with the current market conditions through targeted facility consolidations, headcount reduction and other measures. These actions are likely to have boosted the company’s January-March quarter margins.
Moreover, Dover has a tradition of making acquisitions in diverse end markets. In January, the company acquired Systech International. This buyout supports Dover’s marking and coding portfolio, and expand software and service revenues within Markem-Imaje. The deal is likely to have been accretive to the first quarter earnings.
However, the company’s global operations might have been adversely impacted due to the coronavirus outbreak, straining demand for its products. Dover is implementing measures to ensure the health and safety of its employees, while continuing to support business partners and customers during this crisis.
Dover produces a wide range of specialized industrial products and manufacturing equipment, hence, the overall slowdown in the U.S manufacturing sector is a threat to the company. Per the Institute for Supply Management, the U.S Purchasing Managers’ Index (PMI) remained below 50 (indicating contraction) for five months in a row till December. Although the index climbed above 50 in January and February, it again contracted to 49.1% in March due to the coronavirus outbreak. A weak manufacturing backdrop, uncertainty in the market and cautious customer spending was further exacerbated by the coronavirus outbreak in the first quarter. These factors are likely to have adversely impacted the company’s quarterly results.
Furthermore, Dover’s Refrigeration & Food Equipment segment has been affected by the tepid food and retail construction markets. The segment’s margin has been affected by lower volumes in the SWEP heat exchanger business, notably in Asia, and reduced retail refrigeration systems demand. Thus, weak refrigeration demand and lower shipments in Asia are likely to have dampened margins during the March-end quarter. Apart from this, foreign-exchange headwinds are expected to have eroded Dover’s margins in the period under discussion.
Dover Corporation Price and EPS Surprise
Dover Corporation price-eps-surprise | Dover Corporation Quote
Our proven model doesn’t conclusively predict an earnings beat for Dover this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Dover is -18.85%. This is because currently the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.13 per share and $1.39, respectively.
Zacks Rank: Dover currently carries a Zacks Rank of 4 (Sell).
Share Price Performance
The company’s shares have lost 10.8% over the past year, compared with the industry’s decline of 17.6%.
Stocks Worth a Look
Here are few Industrial Products stocks which you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
Axon Enterprise, Inc. AAXN has an Earnings ESP of +3.03% and carries a Zacks Rank of 3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lawson Products, Inc. LAWS currently carries a Zacks Rank #3 and has an Earnings ESP of +3.85%.
Berry Global Group, Inc. BERY, another Zacks #3 Ranked stock, has an Earnings ESP of +1.68%.
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