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Dover's (DOV) Earnings and Sales Surpass Estimates in Q4

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Zacks Equity Research
·5 min read
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Dover Corporation DOV reported fourth-quarter 2020 adjusted earnings per share from continuing operations of $1.55, which beat the Zacks Consensus Estimate of $1.37. The figure was up 1% year over year. The company’s productivity and cost initiatives drove top-line improvement in the quarter despite lower revenues.

On a reported basis, Dover delivered earnings per share of $1.25 in the December-end quarter, reflecting year-over-year growth of 9%.

Total revenues in the fourth quarter inched up 0.3% year over year to $1,780 million. The top line surpassed the Zacks Consensus Estimate of $1,724 million.

Dover Corporation Price, Consensus and EPS Surprise

Dover Corporation Price, Consensus and EPS Surprise
Dover Corporation Price, Consensus and EPS Surprise

Dover Corporation price-consensus-eps-surprise-chart | Dover Corporation Quote

Costs and Margins

Cost of sales rose 0.4% year over year to $1,129 million in the reported quarter. Gross profit remained flat at $651 million compared with the prior-year quarter. Gross margin came in at 36.6% compared with the year-ago quarter’s 36.7%.

Selling, general and administrative expenses were up 0.6% to $406 million from the prior-year quarter. Adjusted operating profit increased to $305 million from the year-ago quarter’s $304 million. Operating margin was 17.1%, flat with the final quarter of 2019.

Adjusted EBITDA increased 0.5% year over year to $372.7 million. Adjusted EBITDA margin was 20.9% in fourth-quarter 2020, flat compared with the last-year quarter.

Segmental Performance

The Engineered Products segment revenues were down 7% year over year to $394 million in fourth-quarter 2020. The segment’s adjusted operating income decreased 18% year over year to $61 million.

The Fueling Solutions segment revenues declined 8% to $409 million from the year-earlier quarter’s $445 million. The segment’s adjusted operating income was down 4% year over year to $72 million.

The Imaging & Identification segment revenues increased 5% year over year to $288 million. The segment’s adjusted operating income fell 6% year over year to $58 million.

The Pumps & Process Solutions revenues climbed 6% year over year to $348 million in the fourth quarter. The adjusted operating income for the segment came in at $84.8 million compared with the year-ago quarter’s $75.2 million.

The Refrigeration & Food Equipment segment’s revenues increased to $342 million from the year-earlier quarter’s $306 million. The segment’s adjusted operating income totaled $28 million indicating year-over-year improvement of 71%.

Bookings and Backlog

Dover’s bookings at the end of the fourth quarter were worth $1.94 billion compared with prior-year quarter’s $1.84 billion. Backlog increased 20.7% year over year to $1.76 billion at the end of the reported quarter.

Financial Position

Dover had cash and cash equivalents of $513 million at the end of 2020 compared with $397 million at the end of 2019. The company generated free cash flow of $939 million in 2020 compared with $758 million in 2019. Cash flow from operations amounted to $1.1 billion in 2020 compared with the year-ago figure of $0.9 billion.

2020 Results

Dover reported adjusted earnings per share of $5.67 in 2020, down 4% from the prior year’s $5.93. Earnings beat the Zacks Consensus Estimate of $5.49 and came ahead of the management’s guidance of adjusted earnings per share between $5.40 and $5.45. Including one-time items, the bottom line was $4.70, up 2% year over year.

Sales declined 6% year over year to $6.68 billion in fiscal 2020. However, the top-line figure outpaced the Zacks Consensus Estimate of $6.62 billion.

Outlook

Backed by its ongoing progress in productivity and cost initiatives, the company expected to deliver robust top-line growth, margin expansion and earnings per share accretion in 2021. In 2021, Dover expects adjusted earnings per share between $6.25 and $6.45. Revenue growth is expected to be 8-10% (5% to 6% on an organic basis) for the full year.

Price Performance

Dover’s shares have gained 2.1% over the past year compared with the industry’s growth of 5.1%.

Zacks Rank and Other Stocks to Consider

Dover currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the industrial products sector are AGCO Corporation AGCO, Alcoa Corp. AA and Crown Holdings, Inc. CCK. While AGCO flaunts a Zacks Rank #1 (Strong Buy), Alcoa and Crown Holdings carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an expected earnings growth rate of 15.8% for the current fiscal. The company’s shares have gained around 46% in the past year.

Alcoa has an expected earnings growth rate of 240.5% for the current fiscal. The company’s shares have appreciated around 28.7% in the past year.

Crown Holdings has an expected earnings growth rate of 11.7% for the current fiscal. The company’s shares have advanced around 15% in the past year.

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