On Apr 5, we maintained our Neutral recommendation on
), an industrial conglomerate manufacturing a wide range of
specialized industrial products and manufacturing equipment, on
the basis of expected benefits from its active acquisition
pipeline, bookings and backlog growth, growth in the cell phone
market, offset by concerns regarding headwinds at its Printing
and Identification and Energy segments.
ALTRA HOLDINGS (AIMC): Free Stock Analysis
BABCOCK&WILCOX (BWC): Free Stock Analysis
DOVER CORP (DOV): Free Stock Analysis Report
ENPRO INDUS INC (NPO): Free Stock Analysis
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Dover's fourth-quarter 2012 adjusted earnings were $1.09 per
share, up 7% year over year and ahead of the Zacks Consensus
Estimate of $1.07. Total revenue improved 6% year over year to $2
billion, in line with the Zacks Consensus Estimate, driven by
organic growth of 2% and acquisitions benefit of 5%.
Dover will continue to benefit from its active acquisition
pipeline. Dover remains committed to its target of achieving
annual organic sales growth of 4% to 6% in the next three years,
aided by acquisition growth of 3% to 5%. The company intends to
focus on its five key growth spaces communication components,
energy, product ID, refrigeration and food equipment, and fluid
Dover's total bookings increased 4% year over year in 4Q12,
driven by growth in Engineered Systems and Energy segment
bookings. Total book-to-bill improved to 0.98x compared with
0.94x in the last quarter and backlog at the quarter end
increased 7% year over year. This bodes well for the year 2013.
Dover currently has a market-leading position as a supplier of
microphones for smartphones. The company expects the handset
market to be strong in 2013, supported by numerous new product
releases as well as increased use of multiple microphones per
handset. Dover's largest acquisition, Sound Solutions, a
manufacturer of dynamic speakers and receivers for cell phones
and other consumer electronics, enhanced Dover's product
offerings serving the high growth handset market. Dover expects
Sound Solutions to contribute $0.13 to $0.18 to earnings per
share in 2013.
On the flipside, Dover has significant exposure to domestic oil
and gas production levels and rig counts through its Energy
platform's supply of consumables to the North American energy
sector. Dover's Energy segment's results are expected to be
affected in the first half of fiscal 2013 due to a lower North
American rig count.
Furthermore, Dover has access to the volatile semiconductor and
electronics end-markets through its Printing and Identification
segment. The near-term outlook is bleak for semiconductor
manufacturers, with negatives (tablet cannibalization,
weaker-than-expected spending by both consumers and enterprises)
outweighing the positives (cloud computing, Windows 8) for now.
The segment's results will also be affected given its above
average exposure to Europe.
Other Stocks to Consider
Dover retains a short-term Zacks Rank #4 (Sell).
Babcock & Wilcox Company
EnPro Industries, Inc.
), with a Zacks Rank #1 (Strong Buy), are more favorable options
for investors keen on this industry.