On Sep 17, 2014, Zacks Investment Research upgraded Dover Corporation (DOV) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).
Why the Upgrade?
The diversified equipment manufacturer witnessed strong growth in its second-quarter 2014 results mainly driven by organic growth and acquisitions. On Jul 17, Dover reported 14% year-over-year growth in its adjusted earnings of $1.29 per share, in line with the Zacks Consensus Estimate.
Total revenue rose 6% year on year to $2 billion. Dover ended the quarter with bookings worth $2.086 billion, displaying year-over-year growth of 11%, and backlog of $1.55 billion, representing 12% increase from the year-ago quarter.
At its second-quarter conference call, Dover raised its 2014 earnings guidance to $4.75–$4.85 per share. The company now expects organic revenue growth of 4%. Acquisitions are expected to contribute 3% to the increase, resulting in revenue growth of 6–7% in fiscal 2014.
The company is focused on growing inorganically. Last month, Dover announced that OPW, a unit of its Fluids segment, signed a definitive agreement to acquire all the outstanding shares of Liquip International. The acquisition of Liquip will enable OPW to form a superior product portfolio.
In addition, Dover’s Engineered Systems acquired Italy-based MS Printing Solutions S.r.l in early 2014. In Jul 2014, its Energy segment acquired The WellMark Company to meet the growing global demand of oil and gas customers.
Dover also approved a 7% increase in quarterly dividend on Aug 7. This marked the company’s 59th consecutive hike in payout. Dover will now pay 40 cents per share to its shareholders, up from the prior payout of 37.5 cents.
These bullish factors led to an upward estimate revision in recent times. Over the last 60 days, the Zacks Consensus Estimate for 2014 advanced 0.6% to $4.84 per share and for 2015 the same increased 0.4% to $5.42.
Other Stocks to Consider
Some other stocks in the same sector worth considering include IDEX Corp. (IEX), Middleby Corp. (MIDD) and Nordson Corporation (NDSN). All these carry a Zacks Rank #2 (Buy).
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