Dover (DOV) to Report Q2 Earnings: What's in the Offing?

Dover Corporation DOV is set to release second-quarter 2020 results, before the opening bell on Jul 22.

A Sneak Peek at Q1 Results

Dover reported mixed results for first-quarter 2020, wherein earnings beat the Zacks Consensus Estimate and improved year over year. The company’s sales missed estimates as well as declined year on year. The company beat estimates in all of the trailing four quarters, the average beat being 7.13%.

Which Way Are Estimates Treading?

The Zacks Consensus Estimate for Dover’s second-quarter earnings is currently pinned at 89 cents, calling for a year-over-year plunge of 43%. The same for total revenues is pegged at $1,457 million, indicating a decline of 19.5% from the prior-year quarter. The Zacks Consensus Estimate for the June-end quarter’s earnings moved north over the past 30 days.

Let’s see how things have shaped up prior to this announcement.

Key Factors

Dover’s second-quarter 2020 results are likely to reflect benefits from solid order backlog across all business segments, along with its productivity and cost initiatives. The company has executed restructuring programs to better align costs and operations with the current market conditions through targeted facility consolidations, headcount reduction and other measures. These actions are likely to have boosted Dover’s April-June quarter margins.

However, the company’s operations in the United States and Europe might have been adversely impacted during the to-be-reported quarter due to the coronavirus crisis, straining demand for its products.

Slowdown in the Industrial Automation and vehicle aftermarket business due to operational interruptions in China and Europe-based facilities might have hurt the Engineered Products business in the quarter under review. Moreover, global shutdown of Apparel Retail is likely to have thwarted the Imaging & Identification segment’s digital textile printing business during the period under discussion. Apart from this, weak oil and gas markets might have dented the Pumps & Process Solutions business during the quarter. Meanwhile, solid demand for food and beverage, power generation as well as robust growth in the biopharma and hygiene market might have been conductive to the segment’s quarterly performance.

Dover’s Refrigeration & Food Equipment segment has lately been affected by the dismal food and retail construction markets. The segment’s SWEP heat-exchanger business has faced operational disruptions in Asia and demand reduction in the HVAC industry globally. These factors are likely to have dampened margins during the June-end quarter.

The company produces a wide range of specialized industrial products and manufacturing equipment, hence, the overall slowdown in the U.S manufacturing sector is a threat to the company. Per the Institute for Supply Management’s report, the U.S Purchasing Managers’ Index (PMI) came in at 41.5% for April — the lowest since April 2009 when it registered 39.9%. In May, the PMI came in at 43.1%. A reading below 50 denotes contraction.  Even though the he index has climbed to 52.6% in June, overall for the second quarter, the manufacturing index averaged 45.7%.

Dover Corporation Price and EPS Surprise

Dover Corporation Price and EPS Surprise

Dover Corporation price-eps-surprise | Dover Corporation Quote

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Dover this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Dover is -0.14%.

Zacks Rank: Dover currently carries a Zacks Rank of 2 (Buy).

Share Price Performance

The company’s shares have gained 6.6%, over the past year, as against the industry’s decline of 3.4%.

Stocks Worth a Look

Here are few Industrial Product stocks which you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Allegion plc ALLE has an Earnings ESP of +2.27% and carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lincoln Electric Holdings, Inc. LECO currently carries a Zacks Rank #2 and has an Earnings ESP of +5.50%.

W.W. Grainger, Inc. GWW, a Zacks #3 Ranked stock, has an Earnings ESP of +13.76%.

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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.

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