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Dover (DOV) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Dover Corporation DOV is set to release first-quarter results, before the opening bell on Apr 18.

Dover’s fourth-quarter 2018 adjusted earnings and revenues climbed 25% and 3.2%, respectively, on a year-over-year basis. The metrics also beat their respective Zacks Consensus Estimate.

In the last reported quarter, the company posted a positive earnings surprise of 10.8%. Notably, Dover surpassed the Zacks Consensus Estimate in each of the last four quarters, average surprise being 6.59%.

Let’s see how things are shaping up prior to this announcement.

Dover Corporation Price and EPS Surprise

Dover Corporation Price and EPS Surprise | Dover Corporation Quote

Earnings Whispers

Our proven model shows that Dover is likely to beat estimates in the first quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:

Earnings ESP: Earnings ESP for Dover is +0.25%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at $1.13 and $1.12, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Dover currently carries a Zacks Rank #3, which when combined with a positive ESP, makes us reasonably confident of an earnings beat.

It should be noted that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors at Play

Dover’s first-quarter 2019 results are likely to improve on robust bookings growth, solid order backlog, margin improvement and rightsizing programs. Throughout the year, impressive performance of the Engineered Systems and Fluids segments with strong organic growth, benefits from cost-containment actions, as well as footprint optimization projects and retail refrigeration will negate the impact of weak demand in the Refrigeration & Food Equipment segment.

Dover’s bookings at the end of the fourth quarter were worth $1.85 billion, up from $1.71 billion at the end of fourth-quarter 2017. Backlog increased 16.4% year over year to $1.35 billion at the end of the reported quarter. This will continue in first-quarter 2019 as well.

The Zacks Consensus Estimate for Dover’s first-quarter earnings edged down roughly 1.7%, over the last 60 days and is currently pinned at $1.12. The earnings estimate reflects year-over-year decline of around 3.4%. The Zacks Consensus Estimate for total sales of $1,687 million for the quarter reflects a decline of 12% from the prior-year quarter.

Coming to the segments, the Zacks Consensus Estimate for Dover’s Fluids segment net sales is pegged at $656 million for the to-be-reported quarter, representing a year-over-year increase of 18.6%.

Moreover, the Zacks Consensus Estimate for the Refrigeration and Food Equipment segment’s net sales is $330 million for the quarter, representing a year-over-year decline of 2.3%. In the fourth quarter, this segment was affected by delayed shipments at the Belvac business. The company expects revenues at the segment affected by softness in the retail refrigeration market.

Meanwhile, the company had earlier projected adjusted EPS at $5.65-$5.85 for the current year. The company anticipates full-year revenue growth of 2-3%, which comprises organic growth of 2-4% and a 1% impact from the Belanger acquisition. This is likely to be partly offset by an expected 2% unfavorable impact from foreign-currency exchange. On Jan 25, Dover completed the Belanger acquisition, which will likely be accretive to margins and earnings in 2019.

Dover anticipates to benefit from its targeted cost-reduction initiatives in 2019. 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. The company expects annualized run-rate savings of $18 million in the ongoing year.

Dover’s shares have gained 3.0% in the past year compared with the industry’s growth of 7.8%.


Other Stocks to Consider

Here are a few other companies that you may want to consider, as our model shows these too have the right combination of elements to post an earnings beat this quarter:

Valmont Industries, Inc. VMI has an Earnings ESP of +11.60% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Axon Enterprise, Inc. AAXN has an Earnings ESP of +6.99% and carries a Zacks Rank #3.

Rockwell Automation, Inc. ROK has an Earnings ESP of +1.13% and carries a Zacks Rank #3.

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