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Dover (DOV) Q2 Earnings Beat, Up Y/Y, '17 Guidance Raised
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Dover Corporation (DOV - Free Report) reported second-quarter 2017 earnings per share from continuing operations of $1.04, which surged 37% from 76 cents recorded in the prior-year quarter. Earnings also beat the Zacks Consensus Estimate of $1.00.
Total revenue increased 18% year over year to $1.993 billion in the quarter, which came ahead of the Zacks Consensus Estimate of $1.942 billion. The year-over-year increase was driven by acquisition growth of 12% and organic growth of 10%, partly offset by a 3% impact from dispositions, and an unfavorable impact from foreign exchange of 1%.
Costs and Margins
Cost of sales increased 17.9% year over year to $1.24 billion in the reported quarter. Gross profit rose 18.7% year over year to $749.4 million and subsequently gross margin expanded 20 basis points (bps) to 37.6%.
Dover Corporation Price, Consensus and EPS Surprise
Selling, general and administrative expenses increased to $484 million from $437.4 million recorded in the prior-year quarter. Operating profit jumped 36.9% to $265.4 million from $193.8 million in the year-ago quarter. Operating margin expanded 180 bps to 13.3%.
Segmental Performance
Energy revenues climbed 38.7% year over year to $359 million in the quarter. The segment reported an operating profit of $53.4 million compared to a loss of $0.75 million recorded in the comparable period last year.
Revenues in the Engineered Systems segment increased to $655.4 million from $592.4 million recorded in the year-earlier quarter. The segment’s income increased 2.7% year over year to $106.8 million.
Revenues in the Fluids segment jumped 36% year over year to $553.3 million in the reported quarter. The segment’s income rose 36% year over year to $73.6 million.
The Refrigeration & Food Equipment segment’s revenues edged down 0.7% to $426.3 million from $429.4 million recorded in the prior-year quarter. The segment reported an operating income of $65.8 million, up from $63.2 million in the year-earlier period.
Bookings and Backlog
Dover’s bookings at the end of the second quarter were worth $2.02 billion, up from $1.69 billion at the end of second-quarter 2016. Backlog also increased to $1.33 billion at the end of the reported quarter from $1.09 billion at the year-ago quarter end.
Financial Position
Dover generated free cash flow of $150.5 million in the quarter under review compared with $172.9 million in the prior-year quarter. Cash flow from operations came in at $155.9 million in the reported quarter compared with $207.9 million in the year-ago quarter.
Outlook
Dover raised its revenue and EPS guidance for full-year 2017, driven by solid second-quarter performance. The company now guides adjusted earnings per share in range of $4.23–$4.33, up from the prior band $4.05–$4.20 for 2017. The company also expects its full-year revenues to grow in the range of 12–14% compared with the previous outlook of 11–13%.
The revenue growth guidance comprised organic growth of 5–7% and acquisition growth of approximately 10%, partially offset by a 2% impact from the dispositions and a 1% headwind from foreign exchange.
Share Price Performance
Over the last one year, Dover underperformed the Zacks classified Machinery - General Industrial sub-industry with respect to price performance. The stock gained 18.5%, while the industry recorded growth of 30.6% over the same time frame.
AGCO has expected long-term growth rate of 12.41%.
Apogee has expected long-term growth rate of 12.50%.
Cimpress has expected long-term growth rate of 17.50%.
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Dover (DOV) Q2 Earnings Beat, Up Y/Y, '17 Guidance Raised
Dover Corporation (DOV - Free Report) reported second-quarter 2017 earnings per share from continuing operations of $1.04, which surged 37% from 76 cents recorded in the prior-year quarter. Earnings also beat the Zacks Consensus Estimate of $1.00.
Total revenue increased 18% year over year to $1.993 billion in the quarter, which came ahead of the Zacks Consensus Estimate of $1.942 billion. The year-over-year increase was driven by acquisition growth of 12% and organic growth of 10%, partly offset by a 3% impact from dispositions, and an unfavorable impact from foreign exchange of 1%.
Costs and Margins
Cost of sales increased 17.9% year over year to $1.24 billion in the reported quarter. Gross profit rose 18.7% year over year to $749.4 million and subsequently gross margin expanded 20 basis points (bps) to 37.6%.
Dover Corporation Price, Consensus and EPS Surprise
Dover Corporation Price, Consensus and EPS Surprise | Dover Corporation Quote
Selling, general and administrative expenses increased to $484 million from $437.4 million recorded in the prior-year quarter. Operating profit jumped 36.9% to $265.4 million from $193.8 million in the year-ago quarter. Operating margin expanded 180 bps to 13.3%.
Segmental Performance
Energy revenues climbed 38.7% year over year to $359 million in the quarter. The segment reported an operating profit of $53.4 million compared to a loss of $0.75 million recorded in the comparable period last year.
Revenues in the Engineered Systems segment increased to $655.4 million from $592.4 million recorded in the year-earlier quarter. The segment’s income increased 2.7% year over year to $106.8 million.
Revenues in the Fluids segment jumped 36% year over year to $553.3 million in the reported quarter. The segment’s income rose 36% year over year to $73.6 million.
The Refrigeration & Food Equipment segment’s revenues edged down 0.7% to $426.3 million from $429.4 million recorded in the prior-year quarter. The segment reported an operating income of $65.8 million, up from $63.2 million in the year-earlier period.
Bookings and Backlog
Dover’s bookings at the end of the second quarter were worth $2.02 billion, up from $1.69 billion at the end of second-quarter 2016. Backlog also increased to $1.33 billion at the end of the reported quarter from $1.09 billion at the year-ago quarter end.
Financial Position
Dover generated free cash flow of $150.5 million in the quarter under review compared with $172.9 million in the prior-year quarter. Cash flow from operations came in at $155.9 million in the reported quarter compared with $207.9 million in the year-ago quarter.
Outlook
Dover raised its revenue and EPS guidance for full-year 2017, driven by solid second-quarter performance. The company now guides adjusted earnings per share in range of $4.23–$4.33, up from the prior band $4.05–$4.20 for 2017. The company also expects its full-year revenues to grow in the range of 12–14% compared with the previous outlook of 11–13%.
The revenue growth guidance comprised organic growth of 5–7% and acquisition growth of approximately 10%, partially offset by a 2% impact from the dispositions and a 1% headwind from foreign exchange.
Share Price Performance
Over the last one year, Dover underperformed the Zacks classified Machinery - General Industrial sub-industry with respect to price performance. The stock gained 18.5%, while the industry recorded growth of 30.6% over the same time frame.
Zacks Rank
Dover currently carries a Zacks Rank #2 (Buy).
Other top-ranked companies in the same sector are AGCO Corporation (AGCO - Free Report) , Apogee Enterprises, Inc. (APOG - Free Report) and Cimpress N.V. (CMPR - Free Report) , all three sporting a Zacks Rank #1 (Strong Buy). You can see tthe complete list of today’s Zacks #1 Rank stocks here.
AGCO has expected long-term growth rate of 12.41%.
Apogee has expected long-term growth rate of 12.50%.
Cimpress has expected long-term growth rate of 17.50%.
3 Top Picks to Ride the Hottest Tech Trend
Zacks just released a Special Report to guide you through a space that has already begun to transform our entire economy...
Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>