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Dover (DOV) Misses Q4 Earnings Estimates; Revenue Up Y/Y

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Dover CorporationDOV reported fourth-quarter 2016 adjusted earnings per share from continuing operations of 71 cents, which declined over 12% year over year. Earnings also missed the Zacks Consensus Estimate of 84 cents.

Including one-time items, earnings came in at $1.03 per share, up from the prior-year figure of $0.87.

Total revenue increased 5% year on year to $1.778 billion in the quarter, which came ahead of the Zacks Consensus Estimate for revenues of $1.703 billion. The year-over-year increase in revenue was driven by acquisition growth of 11%, offset by an organic revenue decline of 2%, a 3% impact from dispositions, and an unfavorable impact from foreign exchange of 1%.

Dover Corporation Price, Consensus and EPS Surprise

Dover Corporation Price, Consensus and EPS Surprise | Dover Corporation Quote

Costs and Margins

Cost of sales increased 7.2% year over year to $1.16 billion in the reported quarter. Gross profit inched up1% year over year to $619.7 million and subsequently gross margin contracted 130 basis points (bps) to 34.9%.

Selling, general and administrative expenses increased to $455.6 million from $414.4 million in the prior-year quarter. Operating profit declined17.7% to $164 million from $199 million in the year-ago quarter. Operating margin contracted 260 bps to 9.2%.

Segmental Performance

Energy revenues dipped 9.4% year over year to $293 million in the quarter. The segment reported an operating profit of $30.9 million, down 1.3% from $31.3 million a year ago.

Revenues in the Engineered Systems segment increased to $626.3 million from $597 million in the year-ago quarter. The segment's income declined 8.5% year over year to $96.8 million.

Revenues in the Fluids segment surged 35.8% year over year to $482.9 million in the reported quarter. The segment's income plummeted 44% year over year to $34.7 million.

The Refrigeration & Food Equipment segment's revenues decreased 10% to $376.4 million from $418.8 million in the prior-year quarter. The segment reported an operating income of $118 million, significantly up from $42.8 million a year ago.

Bookings and Backlog

Dover's bookings at the end of fourth quarter were worth $6.80 billion, in line with the end of fourth-quarter 2015. Backlog declined to $1.08 billion at the end of the reported quarter from $1 billion at the year-ago quarter end.

Financial Position

Dover generated free cash flow of $239.6 million in the fourth quarter, compared with $273.6 million in the prior-year quarter. Cash flow from operations came in at $289 million in the reported quarter compared with $316.6 million in the year-ago quarter.

2016 Performance

Dover reported adjusted earnings per share of $2.82 in 2016, down 22% from $3.63 per share recorded in the prior year. Earnings missed the Zacks Consensus Estimate of $2.92 per share. Including one-time items, the bottom line came in at $3.25, down 15% from $3.74 recorded in 2015.

Revenues declined 2% year over year to $6.8 billion from $7 billion in 2015. Revenues came ahead of the Zacks Consensus Estimate $6.72 billion.

Outlook

Dover reaffirmed its earnings per share guidance range of $3.40-$3.60 (excluding one-time items) for full-year 2017. The company also restated its full-year revenue growth guidance range of 10%-12%, including organic growth of 3%-5% and acquisition growth of approximately 10%, partially offset by a 1% impact from dispositions and a 2% headwind from foreign exchange.

Share Price Performance

In the last one year, Dover has outperformed the Zacks classified Industrial Services sub-industry with respect to price performance. The stock gained 47.3%, while the industry rose 36.3% over the same time frame.

Zacks Rank

Dover currently carries a Zacks Rank #3 (Hold).

Some better-ranked industrial product stocks are Altra Industrial Motion Corp. AIMC , Chart Industries, Inc. GTLS and RBC Bearings Inc. ROLL .

Altra Industrial Motion delivered an average positive earnings surprise of 8.06% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Chart Industries also boasts a Zacks Rank #1 and has delivered a whopping average positive earnings surprise of 548.51% in the past four quarters. RBC Bearings Incorporated, another Zacks Rank #1 stock, has an average positive earnings surprise of 1.60% for the past four quarters.

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Dover Corporation (DOV): Free Stock Analysis Report

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


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

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