Dover Corporation (DOV) recently announced that its board has authorized an additional $1 billion share repurchase program. The company will repurchase the shares over the next 12 to 18 months, utilizing its available cash and proceeds from divestitures and free cash flow. Dover also announced its intent to divest certain non-core businesses, which cater to the electronic assembly and test markets.
Dover recently reported its third-quarter 2012 earnings of $1.30 per share, beating the Zacks Consensus Estimate of $1.27. Results improved 10.2% from the prior-year quarter’s earnings of $1.18 per share.
Total revenue was $2.209 billion, improving 3% year over year, missing the Zacks Consensus Estimate of $2.249 billion. The revenue increase included an organic growth of 1% and increase from acquisitions by 4%, partially offset by negative impacts of 2% from foreign currency.
For 2012, Dover trimmed its guidance for both revenues and EPS. The company now expects revenue growth of 7%, down from the range of 8%-10%. Organic revenue growth will contribute 3% while acquisitions will add 4% to the revenue growth. It expects earnings to lie in the band of $4.55-$4.65, down from the previous range of $4.70-$4.85.
Dover continues to pursue strategic acquisitions in a bid to improve its product offering and complement its organic growth strategy. Its acquisition pipeline is ever active.
In addition, Dover has consistently focused on returning capital to shareholders through dividend increases and share repurchases. Dover recently announced an 11% (3.5 cents) hike in its quarterly dividend to 35 cents from the prior payout of 31.5 cents. This marks the 57th consecutive year of dividend hike by Dover and places the company in the fourth position with respect to highest number of consecutive annual dividend increases among all listed companies, according to Mergent’s Dividend Achievers.
The assets to be sold contribute a small portion to Dover's revenue and profits. The effect will not be material but the move will enable Dover to concentrate on its targeted five focus markets –Energy, Refrigeration and Food Equipment, Communication Components, Product Identification, and Fluids.
However, Dover is facing challenges in the Handset and Electronic markets. Moreover, the uncertainty in global economic condition adds to the woe.
New York-based Dover is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. Dover retains a short-term Zacks #4 Rank (Sell).
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