Dover's 2012-2014 Vision - Analyst Blog

Dover Corp. ( DOV ) at its investor day highlighted its growth expectations for 2012 through 2014. The company has backed its earlier guidance meant for fiscal 2011.

For fiscal 2011, Dover reiterated its full year revenue growth projection of 20% climbing to approximately $8.2 billion. This includes organic revenue growth of 13% and 7% from acquisitions. Segment margin is projected at 16.8%. The company maintained its EPS guidance in the range of $4.45-$4.50. Estimated free cash flow is expected to be around 10% of revenue. The Zacks Consensus Estimates for revenue and EPS are at $8.3 billion and $4.51, above the company's stated estimates.

For 2012, the company expects the rate of revenue growth to dip to a range of 7% to 10% due to weakness in the semiconductor and European market. The growth rate includes organic sales growth of 4% to 7% and a 3% impetus from acquisitions. Segment margin is expected to be up 40 to 70 basis points from 2011 levels. Capital expenditure is at around 3% of revenues.

For the years 2012 to 2014, Dover envisions organic sales growth of 7% to 9% complemented by acquisition growth of 3% to 5%. With continued focus on productivity and strategic pricing, besides revamping its portfolio, the company is expected to deliver annualized segment margin expansion of 50 to 70 basis points ith 2014 segment margin approaching 19%. The tax rate is expected to be around 27%. Annual capital expenditure is planned at around 2.5% to 3% of revenues with the company hoping to generate free cash flow of 10% to 11% of revenues.

In the 2009 to 2011 time frame, Dover has broached 21 deals totaling $1.8 billion. 39% of the deals have been made in the Energy space while 49% in the communication technologies business.The most notable acquisition, for $855 million, of Sound Solutions, the world's leading manufacturer of dynamic speakers and receivers for cell phones and other consumer electronics, will position Dover as the leading provider of acoustic products (microphones, receivers, speakers), serving the fast growing cellular handset market. Dover foresees strong growth in the global cell phone market as cell phones become increasingly indispensable for consumers.

Doveralso acquired pump manufacturer Harbison-Fischer Inc. for $403 million. The acquisition is a strategic fit for Norris Production Solutions (an operating unit within Dover's Fluid Management segment), as well as for Dover's Energy platform. The acquisition will expand Norris Production Solutions' portfolio of industry-leading technology in artificial lift and will enable it to deliver highly valued, comprehensive down-hole rod lift solutions to its customers. Dover expects the acquisition to help the company better penetrate into the attractive international oil and gas markets. Dover continues to pursue strategic acquisitions within its five targeted markets (Energy, Fluid Solutions, Communication Components, Product ID and Food & Refrigeration) in a bid to improve its product offering and complement its organic growth strategy. Further, Asia has proved to be the fastest growing region in 2011. The company remains focused on developing markets for speedy growth.

Significantly, the company has hiked its dividend for fifty-six years in a row, the fourth longest record of consecutive annual dividend increases among all listed companies. Dover remains committed to growing its annual dividend going forward.

Dover announced earlier that it is realigning its business segments to support its growth initiatives and make the company's performance easier to measure against other companies. The company has unfailingly restructured its business over the past two years, replacing low margined business units with higher margined ones.

Solid performance and bookings across all segments along with the ability to generate strong cash flow, continued focus on margin improvement and shareholder value position Dover well for favorable results in the upcoming quarters. Dovercurrently has a Zacks #3 Rank, which translates into a short-term Hold recommendation.

Dover Corporation is an industrial conglomerate producing a wide range of specialized industrial products and manufacturing equipment. It operates primarily in the U.S. and has subsidiaries and affiliates in Canada, France, Germany, the Netherlands, Sweden, China and the United Kingdom. Dover caters to a diverse clientele primarily spread across the Americas, Europe and Asia. Dover competes with the likes of Cooper Industries plc ( CBE ), Ingersoll-Rand Plc ( IR ), and Weatherford International Ltd. ( WFT ).

COOPER INDS PLC ( CBE ): Free Stock Analysis Report

DOVER CORP ( DOV ): Free Stock Analysis Report

INGERSOLL RAND ( IR ): Free Stock Analysis Report

WEATHERFORD INT ( WFT ): 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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