Factors Setting The Tone For Dover's (DOV) Q3 Earnings

Dover Corporation (NYSE:DOV) is set to release third-quarter 2019 results, before the opening bell on Oct 17. The company’s results for the Sep-end quarter are likely to reflect benefit from solid backlog, improved performance in the Engineered Systems and Fluids segments, cost-reduction initiatives, as well as restructuring programs.

In the last reported quarter, Dover’s earnings beat the Zacks Consensus Estimate. The company delivered a positive earnings surprise in all of the trailing four quarters, the average beat being 6.91%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Dover’s third-quarter 2019 results are likely to reflect benefits from solid order backlog. Impressive performance of the Engineered Systems and Fluids segments, benefits from cost-containment actions, as well as footprint optimization projects and retail refrigeration are expected to have mitigated the impact of weak demand in the Refrigeration & Food Equipment segment.

The Zacks Consensus Estimate for Dover’s to-be-reported quarter’s earnings is currently pinned at $1.53, reflecting year-over-year growth of 12.5%. The Zacks Consensus Estimate for total sales of $1,815 million for the quarter indicates an improvement of 3.9% from the prior-year quarter.

Coming to the segments, the Zacks Consensus Estimate for Dover’s Fluids segment net sales is pegged at $725 million for the quarter, representing an expected year-over-year increase of 5%. The company completed the acquisition of All-Flo Pump Co in the June-end quarter, which is likely to have aided the Fluids segment margins in the July-September quarter.

The Zacks Consensus Estimate for the Engineered Systems segment’s revenues is currently pinned at $702 million, a projected increase of 4.5% from the prior-year quarter’s $672 million.

Moreover, the Zacks Consensus Estimate for the Refrigeration and Food Equipment segment’s net sales is $395 million for the quarter under review, suggesting year-over-year growth of 2.3%. Nevertheless, the segment’s third-quarter revenues and margin will likely reflect the impact of dismal retail refrigeration markets, and lower shipment in Asia.

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 aided the company’s third-quarter margins.

Dover Corporation Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that Dover is likely to beat on earnings in this quarter as it lacks the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is not the case here as you will see below:

Earnings ESP: The Earnings ESP for Dover is -0.66%. This is because currently the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.52 and $1.53, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Dover currently carries a Zacks Rank of 3, which increases the predictive power of ESP. But we also need to have a positive earnings ESP to be sure of an earnings beat.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Price Performance

In a year’s time, shares of Dover have gained 18.7%, outperforming the industry’s growth of 9.8%.

Stocks to Consider

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

Cintas Corporation (NASDAQ:CTAS) has an Earnings ESP of +0.16% and currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northwest Pipe Company (NASDAQ:NWPX) , a Zacks #3 Ranked stock, has an Earnings ESP of +19.23%.

Sealed Air Corporation (NYSE:SEE) has an Earnings ESP of +2.40% and holds a Zacks Rank of 3, at present.

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