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Dover (DOV) Attains 52-Week High: Can It Scale Higher?
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On Dec 29, Dover Corporation (DOV - Free Report) scaled a 52-week high of $102.06 during intraday trading, finally closing lower at $100.99.
The stock has a market capitalization of $14.92 billion. Average volume of shares traded in the last three months is around 1.02 million. Investors are optimistic on this Zacks Rank #3 (Hold) company's efforts to simplify portfolio and invest in market-leading platforms with strong margin profiles. Also, solid booking trends and backlog growth bodes well.
The stock has surged 32.2% in a year, higher than the S&P 500's growth of 20.0%. Dover has also outperformed the industry's 29.9% gain.
Growth Drivers
Dover has decided to spin-off its Wellsite business into a stand-alone, publicly-traded company, in order to separate the company’s upstream energy businesses in the Energy segment. The company's Wellsite business, which includes Dover Artificial Lift, Dover Energy Automation, and US Synthetic, operates in the oil & gas drilling as well as production industry.
Dover estimates that the spin-off will be in the form of a distribution of 100% of the stock of Wellsite, which will be tax-free for the company and U.S. shareholders, for income tax purposes. As part of the transaction, Wellsite is projected to raise new debt in the range of $700-$800 million — the proceeds of which will be paid to Dover in the form of a dividend. The company expects to return the proceeds to shareholders as the primary source of funding for its $1 billion of share repurchases. The share buyback is expected to be completed in 2018.
It has also recently signed an agreement to sell the consumer and industrial winch business of Warn for $250 million. The divestment is anticipated to close in the fourth quarter. These steps will aid the company in streamlining business along with investing in market-leading platforms that have strong market positions, margin profiles and are less volatile with bright prospects.
The company has also announced to expand the scope of its previously-announced rightsizing initiatives. These include headcount reductions and facility closures, as well as consolidations due to the company’s focus on reducing cost structure to prepare for Wellsite’s spin-off. The anticipated 2018 benefits, before associated costs, of these actions are now estimated to be $50 million.
The company’s bookings at the end of the last reported quarter were worth $1.94 billion, up from $1.69 billion. Backlog increased 18% to $1.27 billion at the end of the reported quarter. Consequently, the company is poised for a solid fourth quarter and fiscal 2017 results. For 2017, it projects earnings per share to in the range of $4.23-$4.33. The mid-point of the guidance reflects an increase of 38% over 2016 on an adjusted basis. The company estimates revenues to grow in the range of 14-15%, comprising organic growth of 6-7% and acquisition growth of approximately 10%. This will be partially offset by a 2% impact from the dispositions.
Dover anticipates Printing & Identification platform to deliver consistently solid performance, backed by unique position in the digital textile market along with focus on consumables in marking and coding. From the current 3-4% rate, Dover projects the penetration rate of digital technology to surge 30% over the next decade. The company’s comprehensive solutions, including equipment, ink and software, poises it well to fully capitalize on this technology shift. In refrigeration, food retailers in an effort to manage operating cost and differentiate themselves in the market are now investing in closed-door refrigeration cases, energy-efficient systems and in specialized display cases. The company is anticipated to benefit from this demand as it has a leading position in these categories.
Further, its Energy segment has a large backlog of drilled but uncompleted wells in the last few quarters due to significant drilling activity. It expects most of these wells to be completed over the coming quarters.
All these factors are anticipated to boost the company's share price in the days ahead. Its positive long-term growth rate of 13% holds promise.
Stocks to Consider
Better-ranked stocks in the same sector are Kadant Inc. (KAI - Free Report) , Sun Hydraulics Corporation and Parker-Hannifin Corporation (PH - Free Report) .
Kadant sports a Zacks Rank #1 (Strong Buy). You can seethe complete list of today's Zacks #1 Rank stocks here. The company has delivered an average positive earnings surprise of 20.32% in the trailing our quarters. Its shares have surged 64% in the past year.
Sun Hydraulics, a Zacks Rank #1 stock, has delivered an average positive earnings surprise of 9.58% in the trailing our quarters. Its shares have surged 62% in the past year.
Parker-Hannifin has a Zacks Rank #2 (Buy) and a positive average earnings surprise history of 16.55% in the last four quarters. Its shares have gained 43% in the last year.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Dover (DOV) Attains 52-Week High: Can It Scale Higher?
On Dec 29, Dover Corporation (DOV - Free Report) scaled a 52-week high of $102.06 during intraday trading, finally closing lower at $100.99.
The stock has a market capitalization of $14.92 billion. Average volume of shares traded in the last three months is around 1.02 million. Investors are optimistic on this Zacks Rank #3 (Hold) company's efforts to simplify portfolio and invest in market-leading platforms with strong margin profiles. Also, solid booking trends and backlog growth bodes well.
The stock has surged 32.2% in a year, higher than the S&P 500's growth of 20.0%. Dover has also outperformed the industry's 29.9% gain.
Growth Drivers
Dover has decided to spin-off its Wellsite business into a stand-alone, publicly-traded company, in order to separate the company’s upstream energy businesses in the Energy segment. The company's Wellsite business, which includes Dover Artificial Lift, Dover Energy Automation, and US Synthetic, operates in the oil & gas drilling as well as production industry.
Dover estimates that the spin-off will be in the form of a distribution of 100% of the stock of Wellsite, which will be tax-free for the company and U.S. shareholders, for income tax purposes. As part of the transaction, Wellsite is projected to raise new debt in the range of $700-$800 million — the proceeds of which will be paid to Dover in the form of a dividend. The company expects to return the proceeds to shareholders as the primary source of funding for its $1 billion of share repurchases. The share buyback is expected to be completed in 2018.
It has also recently signed an agreement to sell the consumer and industrial winch business of Warn for $250 million. The divestment is anticipated to close in the fourth quarter. These steps will aid the company in streamlining business along with investing in market-leading platforms that have strong market positions, margin profiles and are less volatile with bright prospects.
The company has also announced to expand the scope of its previously-announced rightsizing initiatives. These include headcount reductions and facility closures, as well as consolidations due to the company’s focus on reducing cost structure to prepare for Wellsite’s spin-off. The anticipated 2018 benefits, before associated costs, of these actions are now estimated to be $50 million.
The company’s bookings at the end of the last reported quarter were worth $1.94 billion, up from $1.69 billion. Backlog increased 18% to $1.27 billion at the end of the reported quarter. Consequently, the company is poised for a solid fourth quarter and fiscal 2017 results. For 2017, it projects earnings per share to in the range of $4.23-$4.33. The mid-point of the guidance reflects an increase of 38% over 2016 on an adjusted basis. The company estimates revenues to grow in the range of 14-15%, comprising organic growth of 6-7% and acquisition growth of approximately 10%. This will be partially offset by a 2% impact from the dispositions.
Dover anticipates Printing & Identification platform to deliver consistently solid performance, backed by unique position in the digital textile market along with focus on consumables in marking and coding. From the current 3-4% rate, Dover projects the penetration rate of digital technology to surge 30% over the next decade. The company’s comprehensive solutions, including equipment, ink and software, poises it well to fully capitalize on this technology shift. In refrigeration, food retailers in an effort to manage operating cost and differentiate themselves in the market are now investing in closed-door refrigeration cases, energy-efficient systems and in specialized display cases. The company is anticipated to benefit from this demand as it has a leading position in these categories.
Further, its Energy segment has a large backlog of drilled but uncompleted wells in the last few quarters due to significant drilling activity. It expects most of these wells to be completed over the coming quarters.
All these factors are anticipated to boost the company's share price in the days ahead. Its positive long-term growth rate of 13% holds promise.
Stocks to Consider
Better-ranked stocks in the same sector are Kadant Inc. (KAI - Free Report) , Sun Hydraulics Corporation and Parker-Hannifin Corporation (PH - Free Report) .
Kadant sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. The company has delivered an average positive earnings surprise of 20.32% in the trailing our quarters. Its shares have surged 64% in the past year.
Sun Hydraulics, a Zacks Rank #1 stock, has delivered an average positive earnings surprise of 9.58% in the trailing our quarters. Its shares have surged 62% in the past year.
Parker-Hannifin has a Zacks Rank #2 (Buy) and a positive average earnings surprise history of 16.55% in the last four quarters. Its shares have gained 43% in the last year.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>