Dover's Q3 Earnings To Gain From Boost In Drilling Activity

Dover Corporation (NYSE:DOV) is slated to report third-quarter earnings results on Oct 19, before the market opens.

We believe strong bookings trends, along with consistent rig count additions and higher-than-expected well completions, have set the company up for a strong third quarter. Moreover, solid outlook for Dover’s Engineered Systems segment will drive the quarter’s performance.

Factors at Play

In the Energy segment, significant drilling activity over the last few quarters has created a large backlog of drilled but incomplete wells. During the second-quarter conference call, Dover noted that many of these wells will get completed soon. The company’s forecast also assumed that the rig count will likely be up in the second half of the year.

Thus, rise in well-completion activity will drive the segment’s performance in the to-be-reported quarter. With respect to the third quarter, Dover expects revenues to be up nearly 1-2% sequentially in the Energy segment.

In the Engineered Systems segment, Dover’s Printing & Identification platform will continue to deliver a solid performance, backed by focus on consumables and product innovation, marking and coding, as well as its unique position in the digital textile printing market. The outlook for this business is fairly strong for the third quarter.

Dover achieved organic revenue and bookings growth at every segment during the second quarter. Its bookings increased 19.5% year over year in the second quarter. Backlog also improved to $1.33 billion in the last reported quarter from $1.09 billion recorded at the year-ago quarter end. The strong bookings will drive third quarter results.

Dover Corporation Price and EPS Surprise

Dover Corporation Price and EPS Surprise | Dover Corporation Quote

Notably, Dover beat the Zacks Consensus Estimate for earnings in the last quarter. Further, shares of Dover have gained 26.1% year to date, outperforming the industry’s growth of 23.9%.

So what should investors expect from Dover’s Q3 earnings announcement? By using our Zacks Consensus Estimates, as well as our exclusive non-financial metrics file, we’ve found three important things to note ahead of Dover’s report:

Earnings

Based on the latest Zacks Consensus Estimate, we expect Dover to report earnings of $1.12 per share in the third quarter. This would mark growth of 29% from the 87 cents per share posted in the year-ago quarter.

Revenue

The Zacks Consensus Estimate for the Energy segment’s revenue growth for the quarter to be reported is pegged at 0.33%, contrary to a decline witnessed in the prior quarter. Dover’s Engineered Systems segment’s revenue also expected to grow at 0.9% for the third-quarter compared to 2% drop in the year ago quarter.

Operating earnings

We estimate the company’s Energy segment to report operating earnings of $54 million, significantly higher than the prior-year quarter’s earnings of $13.3 million. Further, the Engineered Systems segment is projected to report earnings of $103 million compared to $97 million reported in the previous quarter.

Currently, Dover carries a Zacks Rank #3 (Hold).

Stocks Worth a Look

Here are a few stocks in the industrial products sector worth considering as these have the right combination of elements to post an earnings beat this quarter.

Altra Industrial Motion Corp. (NASDAQ:AIMC) is scheduled to report quarterly numbers on Oct 20. It has an Earnings ESP of +5.76% and carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A. O. Smith Corporation (NYSE:AOS) also has a Zacks Rank #2 and its Earnings ESP is +0.11%. The company is slated to release third-quarter results on Oct 25.

Caterpillar Inc. (NYSE:CAT) has an Earnings ESP of +0.61% and carries a Zacks Rank #2. It is scheduled to release earnings on Oct 24.

5 Trades Could Profit "Big-League" from Trump Policies

If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.

Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.

See these buy recommendations now >>