The Board of Dover Corporation (DOV) sanctioned a new stock repurchase program, replacing the prior authorization of 10 million shares, which allows the company to buy back up to 15 million shares over the next three years.
The new share repurchase authorization is in sync with the company’s long-standing history of dividend increases and share repurchases. Dover intends to fund the new buyback through cash on hand, proceeds from divestitures and free cash flow.
Under the previous $10 million share buyback program, sanctioned in May 2012, Dover repurchased around 1,146,946 shares. As of Sep 30, 2014, there were around 2,761,343 shares outstanding.
Dover generated cash flow from operating activities of $294.7 million in third-quarter 2014, up from $281.3 million in the prior-year quarter. Free cash flow also increased to $259.3 million from $241.7 million in the prior-year comparable period.
At its investor conference in New York on Dec 8, Dover initiated its fiscal 2015 guidance and highlighted its growth drivers and outlook for the next three years. For fiscal 2015, the company projected earnings per share in the range of $5.05 to $5.30, backed by revenue growth in the range of 3% to 6%.
However, Dover trimmed its guidance for the fourth quarter and now expects earnings per share to be in the range of $4.55 to $4.62, which reflects the restructuring actions taken up in the fourth quarter and other one-time items related to workforce reductions and efforts to consolidate its manufacturing footprint.
Dover intends to remain focused on expanding its business in key markets that offer significant growth potential, resulting in organic and inorganic growth at all segments. Moreover, the company strives to innovate its products as per customer needs in order to gain market share.
Illinois-based Dover is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. It operates through four major operating segments: Energy, Engineered Systems, Fluids and Refrigeration & Food Equipment.
Dover currently carries a Zacks Rank #3 (Hold). Other stocks worth considering in the sector include The Babcock & Wilcox Co. (BWC), Ingersoll-Rand Plc (IR) and Kadant Inc. (KAI). All these stocks carry a Zacks Rank #2 (Buy).
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