Dover Achieves 52-Week High - Analyst Blog

Shares of Dover Corporation DOV reached a new 52-week high of $90.91 on Jun 20, up from its previous high of $90.63. The new high is based on expected benefits from growth in bookings and orders, acquisitions and positive outlook for the global semiconductor market.

Illinois-based Dover is a diversified machinery producer with a market cap of roughly $15 billion. The company's shares closed at $90.71 at the end of last Friday's trading session, with a year-to-date return of about 14.3% and a solid one-year return of roughly 44.6%, outperforming the S&P 500.  

The company's long-term estimated earnings per share growth rate is 10.7%. Average volume of shares traded over the last three months is approximately 985K.

Dover's Strengths

Dover reported first-quarter 2014 adjusted earnings of $1.01 per share, up 9% from the prior-year quarter. Solid revenue growth, strength in bookings and momentum in building helped the year-over-year increase.

Total revenue also rose 7% year on year to $1.9 billion. The year-over-year rise includes organic growth of 4% and a contribution of 3% from acquisitions. Revenue growth was led by Fluids and Engineered Systems, along with solid growth in the Energy segment.

Dover's total bookings increased 5% year over year to $2 billion in the first quarter, driven by higher bookings in Fluids (20%), Engineered Systems (11%), and Refrigeration & Food Equipment (2%) segments. Backlog also grew 7% year over year with a book-to-bill ratio of 1.0x.

Dover reaffirmed earnings in the range of $4.60–$4.80 per share for 2014. It also reiterates revenue growth of 6%–7% in fiscal 2014 with organic revenue growth of 3%—4%. The company expects full-year segment margin of around 18%.

In early 2014, Dover acquired Italy-based MS Printing Solutions S.r.l. The acquisition will help the Printing & Identification section in expanding beyond the fast moving consumer goods and industrial markets and enter into the textile market. Last year, Dover acquired Italy-based Finder for $145 million to strengthen the position of Pump Solutions Group in the energy market and enhance its global footprint.

In addition, Dover has completed spin off of the Knowles Corporation in Feb 2014. This will simplify Dover's business profile, enabling it to focus on its key growth spaces - Energy, Fluids, Refrigeration & Food Equipment, and Engineered Systems.

The company has also realigned its businesses into a new segment structure organized around its key end-markets to better focus on growth strategies. The company hopes that the new structure will provide better opportunities to leverage its scale and capitalize on productivity initiatives.

Further, the outlook for the global semiconductor market is bright. The World Semiconductor Trade Statistics (WSTS) predicts the global semiconductor market to grow 6.5% from 2013 to $325 billion in 2014. The worldwide semiconductor market is projected to be up 3.3% to $336 billion in 2015.

Moreover, Dover will continue to benefit from bookings and orders growth in the coming quarters.

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

Other Stocks to Consider

Better-ranked stocks in the same industry are Atlas Copco AB (ATLKY), Blount International Inc. BLT and IDEX Corporation IEX. All these have a Zacks Rank #2 (Buy).