This industrial company beat analysts’ EPS estimates by $0.22 last quarter.
Dover Corporation (DOV)
From Dow Theory Forecasts
One of the things that caught our eye about Dover, a new Forecasts recommendation, is the upbeat trends the company sees across all of its businesses. Indeed, every single operating segment posted organic revenue growth of at least 20% in the June quarter. And to show this wasn’t just about easy year-earlier comparisons, each of the five business segments posted organic revenue growth relative to pre-pandemic second quarter 2019.
The upward arrows don’t stop with organic sales growth. Backlog in the second quarter rose 16% sequentially, 69% year-over-year, and 82% versus 2019’s second quarter. Other positive signs include fresh revenue and earnings guidance for 2021, as well as Dover’s dividend (recently increased for the 66th consecutive year). Finally, the most important upward arrow—the stock price—has been trending higher, with these shares recently moving to an all-time high. Dover is rated Buy and Long-Term Buy.
Dover operates in five business segments:
- Engineered Products provides equipment, components, and software for such markets as vehicle service and environmental solutions. Services here include transporting and transforming solid waste streams into sustainable resources; manufacturing work-handling automation components; and providing radio frequency and microwave filters for defense and aerospace markets. Organic revenue growth in this segment topped 25% in the latest quarter, with bookings up more than 73%.
- Fueling Solutions provides advanced fuel-dispensing equipment, electronic systems, and fluid-handling and car-wash equipment. Organic growth was 25% in the latest quarter, with bookings up 33%.
- Imaging & Identification manufactures product-identification and printing solutions. Organic growth here was 20% in the June quarter, with bookings up nearly 27%.
- Pumps & Process Solutions provides products for the safe handling of fluids across the chemical, health-care, oil-and-gas, and industrial markets. Organic revenue growth was nearly 34% in the quarter, with bookings up nearly 82%.
- Refrigeration & Food Equipment develops and supplies equipment for commercial refrigeration, foodservice, and heating/cooling markets. Organic growth here was up more than 43%, with bookings up more than 83%.
Strong revenue growth in the quarter fueled a nice jump in per share profits, which grew 82% and beat the analysts’ consensus estimate of $1.84. In the wake of a boost in full-year guidance, Dover expects revenue growth of 15% to 17% and per-share-profit growth of 29% to 31% in 2021.
Trading at 23 times the 2021 profit consensus, Dover is neither cheap nor excessively valued. The stock offers a nice combo of capital-gains potential and a rising income stream.
Richard Moroney, CFA, Dow Theory Forecasts, dowtheory.com, 800-233-5922, August 16, 2021