Dover Corp. (DOV) is slated to release its fiscal first quarter 2011 results on Thursday, April 21, 2011. The current Zacks Consensus Estimate is 90 cents for the first quarter fiscal 2011, implying a year-over-year growth of 38.6%.
Over the trailing four quarters, Dover outperformed the Zacks Consensus Estimate for four straight quarters. The average earnings surprise was 16.9%, implying that the company has outperformed the Zacks Consensus Estimate by the same magnitude over the last four quarters.
Fourth Quarter and Fiscal 2010 Recap
Dover reported fourth-quarter 2010 adjusted EPS of 94 cents, beating the Zacks Consensus Estimate of 82 cents. Results recorded a 71% increase over the prior-year quarter’s EPS of 55 cents driven by solid performance across all of its segments.
Revenues posted an improvement of 24% year over year to $ 1.87 billion, topping the Zacks Consensus Estimate of $ 1.76 billion. An organic growth of 23% and a 2% increase from acquisitions, which were partially offset by a 1% unfavorable impact from currency translation, were instrumental in revenue growth in the quarter. Revenue increased across all of its segments, particularly led by Electronic Technologies and closely followed by Fluid Management.
Bookings during the quarter under review increased 23% year over year to $ 1.9 billion, driven by booking increases across all segments, particularly in Electronic Technologies. Backlog at the end of fourth quarter 2010 was $ 1.41 billion compared with $ 1.08 billion at the end of the fourth quarter 2009, largely due to a massive backlog increase at Electronic Technologies.
Fiscal 2010 adjusted EPS was $ 3.47 compared with $ 1.84 in the prior year. EPS reported during the year outperformed the Zacks Consensus Estimate of $ 3.36 and also whizzed past the company’s guided range of $ 3.30-$ 3.35.
Fiscal 2010 revenue of $ 7.1 billion outperformed the Zacks Consensus Estimate of $ 7 billion. The year-over-year increase in revenues of 24% was driven by an organic revenue growth of 20% and growth from acquisitions of 4%. The revenue growth reported was above the company’s guidance of revenue growth in the range of 20%-21%, organic revenue growth of 16.5%-17.5% and growth of 3.5% from acquisitions.
Management expects revenue to grow in the range of 9%–11%, fueled by an organic revenue growth of 6%–8% and growth of 3% from acquisitions in fiscal 2011. Management also projects EPS in the range of $ 4.05–$ 4.25, suggesting a year-over-year growth in the range of 17% to 22% over adjusted fiscal 2010 EPS of $ 3.47.
Estimate Revision Trend
For the first quarter, estimates have showed an upward trend in the last 30 days showing that the analysts have an upward bias on Dover. The earnings outlook for Dover thus looks promising and we expect the company to maintain its earnings surprise in the forthcoming quarter.
For fiscal 2011, one estimate has been raised for Dover. The current Zacks Consensus Estimate is $ 4.24, implying an annualized growth of 22.1%. For fiscal 2012, the Zacks Consensus Estimate is pegged at $ 4.88, an annualized growth of 15.2%.
Agreement of Estimate Revisions
Over the last 30 days, 2 analysts out of 9 covering the stock have revised their estimates upward for the first quarter of fiscal 2011 with 1 analyst making a positive revision over the past 1 week. For fiscal 2011, only 1 of the 9 analysts providing estimates lifted the forecast in the last 30 days and 1 analyst raised the estimate in the last 7 days.
For fiscal 2012, 2 analysts out of 8 providing estimates for the year have revised their estimates upward with 1 analyst making a positive revision over the last week. Even though the percentage of analysts revising their estimates is low, it is to be noted that the analysts are in unison as there have been only upward revisions of estimates.
Magnitude of Estimate Revisions
Overall, estimates for the first quarter have climbed 8 cents from 82 cents per share 90 days ago to the current 90 cents per share. The jump came after the fourth-quarter fiscal 2010 earnings release. The current Zacks Consensus Estimate for the first-quarter of 90 cents per share represents a 38.6% year-over-year growth over 65 cents reported in the year-ago quarter.
The current Zacks Consensus Estimate for fiscal 2011 is $ 4.24, an increase of 22.1% over 2010 levels. For fiscal 2011, estimates have gone up by 32 cents from $ 3.92 per share 90 days ago to the current $ 4.24. After the fiscal 2010 earnings announcement, estimates jumped 29 cents. There has been a 2 cent increase over the past 30 days and estimates have inched up a cent in the past week.
For fiscal 2012, over a 90 day timeframe, estimates have been lifted from $ 4.51 per share to the current $ 4.88. The current estimate suggests an annual growth rate of 15.2%.
Our Take
Solid performance and bookings across all segments along with the ability to generate strong cash flow, continued focus on margin improvement and shareholder value position Dover for better results going forward.
Dover continues to pursue strategic acquisitions in a bid to improve its product offering and complement its organic growth strategy. Dover has been active in acquisitions within its five targeted markets (Energy, Fluid Solutions, Communication Components, Product ID and Food & Refrigeration).
The acquisition of Sound Solutions, the world's leading manufacturer of dynamic speakers and receivers for cell phones and other consumer electronics, will place Dover as the leading provider of acoustic products (microphones, receivers, speakers), serving the fast growing cellular handset market. Dover foresees strong growth in the global cell phone market as cell phones become increasingly indispensable for consumers.
Dover also acquired pump manufacturer Harbison-Fischer Inc. The acquisition is a strategic fit for Norris Production Solutions (an operating unit within Dover's Fluid Management segment), as well as for Dover’s Energy platform.
The acquisition will expand Norris Production Solutions' portfolio of industry-leading technology in artificial lifts and will enable it to deliver highly valued, comprehensive down-hole rod lift solutions to its customers. Dover expects the acquisition to facilitate the company’s reach in the attractive international oil and gas markets.
We currently have a Zacks #2 Rank (short-term Buy recommendation) on the stock.
Dover Corporation is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. It operates primarily in the U.S. and has subsidiaries and affiliates in Canada, France, Germany, the Netherlands, Sweden, China, and the United Kingdom.
Dover caters to a diverse clientele primarily spread over the Americas, Europe and Asia. Dover competes with the likes of Cooper Industries plc (CBE), Ingersoll-Rand Plc (IR) and Weatherford International Ltd. (WFT).
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