We have maintained our Neutral recommendation on
) based on the benefits from acquisitions, growth in bookings and
orders and a positive outlook for the semiconductor market.
However, volatile raw material costs will keep margins under
pressure. Above-average exposure to Europe and a lower North
American rig count will also remain headwinds.
BARNES GRP (B): Free Stock Analysis Report
DOVER CORP (DOV): Free Stock Analysis Report
GRAHAM CORP (GHM): Free Stock Analysis Report
GORMAN RUPP CO (GRC): Free Stock Analysis
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Why the Reiteration?
Dover, on Jul 18, reported adjusted earnings of $1.36 per share
in the second quarter of 2013, exceeding the prior-year quarter's
earnings of $1.10 per share. Total revenue also increased 9% year
over year to $2.2 billion, including organic growth of 5% and 4%
contribution from acquisitions.
Dover witnessed solid growth from its businesses serving the
consumer electronics and refrigeration markets along with
contribution from energy and fluids businesses. Furthermore,
Dover's strategic decision to spin off certain parts of its
communication technologies businesses also contributed to growth.
Additionally, revenues were driven by the completion of four
The World Semiconductor Trade Statistics (WSTS) predicts the
global semiconductor market to grow 2% year over year to $298
billion in 2013. The market is expected to recover with
expectations of slight recovery in the global economy and stable
growth of product categories related to smartphones, tablets and
automotive. This will positively impact Dover's Printing and
Furthermore, for fiscal 2013, Dover expects revenue growth in the
range of 7-9% on the back of organic revenue growth of 3-5%,
while acquisitions are expected to add 4%. Earnings per share
from continuing operations are expected to be $5.56 to $5.71.
Dover also raised its quarterly dividend by 7% to $0.375 per
share from $0.35 per share, adding to shareholders' wealth. The
increased dividend will raise Dover's dividend yield from the
current 1.60% to 1.72%. Solid earnings growth should allow the
company to continue this favorable trend in the coming years.
Despite these positives, the Printing & Identification
segment are likely to be affected given its above-average
exposure to Europe while a lower North American rig count will
constrain growth in the Energy segment. In addition, mining and
defense will continue to be weaker.
Moreover, Dover's results will be affected by currency
fluctuations, adverse weather conditions, weakening GDP in Europe
as well as further deterioration in China's economy.
Other Stocks to Consider
Dover currently retains Zacks Rank #3 (Hold). Other stocks in the
same industry with a favorable Zacks rank include
) with Zacks Rank # 1 (Strong Buy), and
Barnes Group Inc.
) with a Zacks Rank #2 (Buy).