Dover's 4Q EPS Beats, Sales Meets - Analyst Blog


Dover Corporation ( DOV ) reported fourth-quarter 2012 adjusted earnings from continuing operations of of $1.09 per share, beating the Zacks Consensus Estimate of $1.07 and exceeding the prior-year quarter's earnings of $1.02 per share.

On a reported basis, earnings from continuing operations were $1.16 per share compared with the prior-year quarter's earnings of $1.05. Earnings in the reported quarter include a tax benefit of 7 cents per share while the year-ago quarter's earnings include a tax benefit of 3 cents.

Dover reported adjusted earnings from continuing operation of $4.44 per share for 2012, a 15% rise from the prior-year quarter's adjusted earnings of $3.87. The results, however, missed the Zacks Consensus Estimate of $4.52. On a reported basis, earnings were $4.53 per share compared with $4.09 posted in 2011.

Revenues and Margins

Total revenues were $2 billion in reported quarter, up 6% year over year, meeting the Zacks Consensus Estimate. The growth includes an organic growth of 2% and a 5% contribution from acquisitions,, partially offset by a negative impact of 1% from foreign currency.

Revenues for the full year increased 9.5% to $8.1 billion from $7.4 billion in 2011. It missed the Zacks Consensus Estimate of $8.3 billion.

Cost of sales increased 6% to $1.24 billion in the fourth quarter from $1.17 billion in the year-ago quarter. Gross profit went up 7.7% year over year to $773.7 million. Consequently, gross margin expanded 40 basis points (bps) to 38.4% in the quarter.

Operating profit rose 7.2% to $304 million. Operating margin was 15.1%, essentially same as the prior year quarter.

Segmental Performance

Revenues in the Communication Technologies segment rose 1.1% to $400.8 million. The segment's income, however, dropped 18% year over year to $58.4 million.

Energy revenues increased 5.8% to $540 million in the quarter. The segment's operating income shot up 9.4% to $133.5 million.

Revenues in the Engineered Systems segment increased 12% to $819.1 million in the quarter. The segment's income surged 9.6% to $101.8 million.

Printing & Identification segment revenues were $254.1 million in the quarter compare with $253.6 million in the prior-year quarter. The segment reported an operating income of $40.65 million, increasing 21% from $33.43 million a year ago.

Bookings and Backlog

The company ended the fourth quarter with $1.971 billion worth of bookings versus $1.902 billion at the end of the fourth quarter of 2011. Backlog increased to $1.45 billion at end of the reported quarter from $1.36 billion a year ago.

Financial Health

The company had free cash flow of $482.5 million in the reported quarter, a 91% year over year increase.

Cash and cash equivalent decreased 34% year over year to $800 million. Total debt was $2.8 billion as of December 31, 2012, up 28% year over year. Debt-to-capitalization ratio increased to 28.9% in 2012 from 16.6% in 2011.

Outlook for 2013

Dover expects revenues to rise in the range of 7%-9% in 2013. This assumes organic revenue improvement of 3%-5% and a 4% contribution from acquisitions. The company expects earnings to be in the band of $5.05-$5.35 per share for 2013.

Our view

Dover is experiencing revenue challenges in the handset and electronic markets. Moreover, the uncertainty in global economic condition adds to the woe.

Dover retains a short-term Zacks #3 Rank (Hold). Altra Holdings ( AIMC ), Metso Corporation ( MXCYY ) and Idex Corporation ( IEX ) also belong to the diversified machinery industry. While Altra and Metso hold a Zacks Rank #1 (Strong Buy), Idex retains a Zacks Rank #2 (Buy).

ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

DOVER CORP (DOV): Free Stock Analysis Report

IDEX CORP (IEX): Free Stock Analysis Report

METSO CORP -ADR (MXCYY): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AIMC , DOV , IEX , MXCYY

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