Dover Corporation (DOV Quick QuoteDOV - Free Report) is gaining from solid end-market demand across all segments, bookings rates and robust order backlog. Benefits from cost-reduction actions, productivity gains, focus on investments and acquisitions and efforts to reduce debt levels will also support growth.

Earnings & Sales Surpass Q1 Estimates: Dover’s first-quarter 2022 earnings and sales beat the respective Zacks Consensus Estimates and increased year over year.

Positive Earnings Surprise History: Dover, a Zacks Rank #3 (Hold) company, has a trailing four-quarter earnings surprise of 7.4%, on average.

Return on Equity (ROE): Dover’s trailing 12-month ROE of 27.8% emphasizes its growth potential. The company’s ROE is higher than the industry’s ROE of 23.3%, highlighting its efficiency in utilizing shareholders’ funds.

Underpriced: Looking at Dover’s price-to-earnings ratio, shares are underpriced at the current level, which is attractive for investors. The company has a trailing P/E ratio of 17.4, below the industry average of 22.0.

Positive Growth Expectations: The company’s earnings estimate for the current year is pegged at $8.57, suggesting year-over-year growth of 12.3%.

Other Growth Drivers

Dover has been gaining from robust order trends across most of its businesses for a while, stemming from strong end-market demand. The company is well poised to deliver robust top-line growth, margin expansion and double-digit earnings per share (EPS) growth in 2022, driven by a strong backlog, margin conversion efforts, benefits from acquisitions, investments in capacity expansions and productivity improvement. DOV expects adjusted EPS to be between $8.45 and $8.65 for 2022, up from $7.63 per share reported in 2021. Organic revenue growth is expected between 7-9% for 2022. Apart from this, the company’s productivity and cost-control initiatives will continue to drive bottom-line growth.

In the Engineered Products segment, demand for engineered products, vehicle service and industrial automation has been solid. Improved price cost spread and strong shipping backlog will likely support the segment’s margin in 2022. The Clean Energy and Fueling segment will gain from solid growth in below-ground, fuel transport, vehicle wash and software solutions coupled with acquisitions in Clean Energy and components.

The Imaging & Identification segment will remain strong as component shortages in core marketing and coding subside. The marking & coding business is expected to maintain its growth trajectory with serialization and brand protection software. Digital textile printing is recovering from the pandemic-induced declines seen in the last two years.

The Pumps & Process Solutions segment will ride on solid activity in industrial pumps and polymer processing. Precision components continue their upward trajectory of growth in refineries and petrochemical plants.

The Climate and Sustainability Technologies segment will perform well in 2022, given the large backlog and continued elevated order rates. New orders and core food retail business have been healthy across its product segments. Also, its heat exchanger and beverage packaging business are seeing strong order rates. Margins in the Imaging & Identification, Pumps & Process Solutions and Climate and Sustainability Technologies segments will improve in the current year, driven by positive price/cost, volume growth, productivity gains and favorable product and business mix.

Dover focuses on investments in capacity expansions in high-growth businesses and productivity improvements across its portfolio. Dover has a long tradition of making successful acquisitions in diverse end markets. It deployed $1.1 billion in nine bolt-on acquisitions in 2021, including Acme and RegO. These acquisitions are contributing to the company’s top line. Dover will remain active on the buyout front in 2022.

The company’s efforts to reduce debt levels, its solid financial position, prudent capital structure, refinancing efforts and momentum in operational execution bode well.

Material cost inflation, input shortages, COVID-19 Omicron variant-related absenteeism and supply chain challenges and labor constraints will continue to unfavorably impact the company’s margin performance.

Stocks to Consider

Some better-ranked stocks in the Industrial Products sector are Graphic Packaging Holding Company (GPK Quick QuoteGPK - Free Report) , Myers Industries (MYE Quick QuoteMYE - Free Report) and Packaging Corporation of America (PKG Quick QuotePKG - Free Report) .  While GPK and MYE flaunt a Zacks Rank #1 (Strong Buy), PKG carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.

Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 14.8% in a year.

Myers Industries has an expected earnings growth rate of 67% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 27% in the past 60 days.

MYE has a trailing four-quarter earnings surprise of 20.1%, on average. Myers Industries’ shares have gained 13% in the past year.

Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings rose 4.2% in the past 60 days.

PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have gained 4% in the past year.