Dover Agrees to Sell Datamax O'Neil Unit to Honeywell - Analyst Blog

In line with its strategy of focusing on its core business, Dover Corporation (DOV) has signed a definitive agreement to sell its Datamax O'Neil unit to Honeywell International Inc. (HON) for $185 million.  Shares of Dover went up 2.1% on the news.

Pursuant to customary regulatory approvals, the transaction is expected to close in the first quarter of 2015. Datamax-O'Neil, which designs, manufactures and markets one of the industry's most complete line of stationary and portable label and receipt printing solution products, came under the umbrella of Dover in 2005.  Datamax-O'Neil's printing solutions enable manufacturing and supply markets to capture the benefits of automated product identification and automated legal and financial transactions.

Moreover, Datamax-O'Neil's products address a wide variety of applications, including those in the industrial, healthcare, retail, automotive and ticketing market sectors. Headquartered in Orlando, FL, Datamax-O'Neil maintains key facilities in California, Illinois and France, as well as sales and technical support offices around the world.

Earlier this month, at its investor conference in New York, Dover initiated fiscal 2015 guidance and highlighted its growth drivers and outlook for the next three years. The diversified global manufacturer, however, trimmed its 2014 guidance to reflect the impact of restructuring actions taken in the fourth quarter.

These actions, which mainly pertain to workforce reductions and efforts to consolidate its manufacturing footprint, are expected to lead to over $50 million in annualized benefits. One-time charge from these actions is estimated at $45 million. Of this, approximately $40 million will impact the fourth quarter.

For fiscal 2014, Dover now expects adjusted earnings per share to lie in the range of $4.55 to $4.62. The 18 to 20 cents reduction from the prior adjusted earnings per share guidance of $4.75-$4.80 (which excluded 4 cents of discrete tax benefits) reflects the impact of restructuring actions taken in the fourth quarter and other one-time items.

Regarding its growth strategy, Dover stated that it will remain focused on expanding its business in key markets that offer significant growth potential, resulting in organic and inorganic growth at all segments. Moreover, the company strives to bring innovation to its products as per customers need and gain market share.

Dover has implemented multiple development and training programs resulting in significant talent enhancement. The company's focus on productivity and continuous improvement, driven by Dover productivity processes, is broad-based and provides the foundation for margin expansion and growth.

Dover currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Blount International Inc. (BLT) and Middleby Corp. (MIDD). Both of these stocks sport a Zacks Rank #1 (Strong Buy).

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