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Dover (DOV) to Report Q4 Earnings: What's in the Cards?

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Zacks Equity Research
·5 min read
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Dover Corporation DOV is set to release fourth-quarter 2020 results, before the opening bell on Jan 28.

Q3 Results

In the last reported quarter, Dover’s earnings and sales beat their respective Zacks Consensus Estimate. While the bottom line remained flat year over year, the top line declined year over year.

The company has beat earnings estimates in each of the trailing four quarters, the average surprise being 18.1%.

Dover Corporation Price and EPS Surprise

Dover Corporation Price and EPS Surprise
Dover Corporation Price and EPS Surprise

Dover Corporation price-eps-surprise | Dover Corporation Quote

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter earnings per share is currently pegged at $1.37, suggesting a slump of 11% from the prior-year quarter. The same for total revenues stands at $1,724 million, indicating a decline of 3% from the prior-year quarter. The Zacks Consensus Estimate for the December-end quarter’s earnings was revised downward by 1% over the past 30 days.

What the Zacks Model Unveils

Our proven model conclusively predicts 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.

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 +5.55%.

Zacks Rank: Dover currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors to Note

Dover has been witnessing improved order levels in multiple markets, notably marking & coding, automotive aftermarket, food retail, heat exchangers, biopharma, can making, plastics & processing and aerospace & defense. This is likely to have favored the to-be-reported quarter’s performance. Further, Dover’s backlog increased 14.3% year over year to $1.58 billion at the end of third-quarter 2020. The company’s fourth-quarter results are likely to reflect the same.

The company produces a wide range of specialized industrial products and manufacturing equipment and thereby, recovery in the manufacturing sector over the past few months bode well. Per the Institute for Supply Management, the U.S Purchasing Managers’ Index (PMI) came in at 59.3% in October, 57.5% in November and 60.7% in December — denoting expansion. Also, industrial production increased at an annual rate of 8.4% for the October-December quarter.

Further, the company’s efforts to improve productivity and cost initiatives might have lead to improved margins in the quarter under review. The company has been executing restructuring programs to better align costs and operations with the current market conditions through targeted facility consolidations, headcount reductions and other measures. These actions are likely to have benefited Dover’s fourth-quarter performance.

Segments Expectations

In the Engineered Products segment, improvement in vehicle service, industrial automation and automotive Original Equipment Manufacturers (OEM) markets might get reflected in the to-be-reported quarter’s top line. Meanwhile, structural cost actions are likely to have benefited the segment’s margins in the quarter. However, volumes are anticipated to have been impacted due to seasonality.

The Fueling Solutions segment is likely to have gained from productivity and pricing actions in the fourth quarter. The Imaging & Identification segment’s results are likely to reflect strong demand for consumables, pick-up in textiles consumable volumes and demand rebound in digital printing business. In Refrigeration & Food Equipment segment, recovery in volumes and cost-control actions may have aided the segment’s fourth-quarter margins.

In the Pumps & Process Solutions segment, strong demand for food and beverage, recovery in industrial pumps, and strong growth in biopharma and hygiene market on account of the pandemic might have aided the segment’s fourth-quarter performance. However, the oil and gas mid- and downstream markets served primarily by precision components business continues to be impacted by deferral of capital expenditure and refurbishment spending in refining and pipelined operators. This might have weighed on the segment’s performance.

Share Price Performance

The company’s shares have gained 8.5% over the past year compared with the industry’s growth of 12.4%.

Other Stocks With Favorable Combination

Here are some other Industrial Products stocks, which you may consider as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases.

AGCO Corporation AGCO has an Earnings ESP of +3.34% and a Zacks Rank of 1, currently.

Sealed Air Corporation SEE has a Zacks Rank #2 and an Earnings ESP of +2.90%, at present.

Graco Inc. GGG, currently a Zacks #3 Ranked stock, has an Earnings ESP of +1.68%.

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