Dover Reaches 52-Week High
Shares of Dover Corporation (DOV) reached a new 52-week high of $80.75 on Tuesday, Jun 18, 2013. The new high was primarily driven by the company’s decision to spin off certain part of its communication technologies businesses. The spin off is expected to enable Dover to focus on its key growth spaces. Moreover, active acquisition pipeline, bookings and orders growth also helped the stock move north.
Dover has delivered a robust one-year return of about 48.86% and year-to-date return of about 23.84%, outperforming the S&P 500. Average volume of shares traded over the last three months was approximately 1.2 million.
This industrial conglomerate that produces a wide range of specialized industrial products and manufacturing equipment has been delivering positive earnings surprises over the past four quarters with an average surprise of 1.74%. This Zacks Rank #3 (Hold) stock has a market cap of $13.8 billion and a long-term expected earnings growth rate of 12.5%.
Dover’s Strengths
Dover’s expansion has been mainly driven by acquisitions. The company remains committed to its target of achieving annual organic sales growth of 4% to 6% in the next three years, aided by acquisition growth of 3% to 5%. In 2012, Dover made significant addition to its artificial lift portfolio (Production Control Services) and to the Fluid Solutions platform (Maag Pump Systems) and refrigeration (Anthony International). The company expects completed acquisitions to be accretive to its 2013 earnings by 13 cents to 16 cents, largely driven by Anthony.
Dover’s decision to spin off certain part of its communication technologies businesses into a standalone, publicly traded company – Knowles, will simplify its business profile and enable it to focus on its key growth spaces - Energy, Fluids, Refrigeration & Food Equipment and Printing & Identification. Following the spin-off, Dover's revenue in 2013 on a pro-forma basis is estimated at around $7.4 to $7.6 billion.
Strong 1Q13 Earnings and Order Growth
Dover’s first-quarter 2013 adjusted earnings per share increased 9% to $1.10. The rise was driven by a 6% contribution from acquisitions, offset by organic decline of 1% as well as a minor impact from foreign exchange.
Dover's total bookings increased 7% year over year to $2.2 billion in the quarter, driven by growth in Engineered Systems, Communication Technologies and Energy segment bookings. Orders increased 1.4% from the year-ago quarter and 12.4% sequentially. We expect the book to bill ratio of 1.09x to boost organic growth in the second quarter.
Other Stocks to Consider
Other stocks in the sector that are currently performing well and have a good visibility include Graco Inc. (GGG) with a Zacks Rank #1 (Strong Buy), while Broadwind Energy, Inc. (BWEN) and Colfax Corporation (CFX) carry a Zacks Rank #2 (Buy).
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