Dover Corporation DOV is benefiting from strong end-market demand across all segments, booking rates and a strong order backlog. The benefits of cost reduction actions, productivity gains, concentration on investments and acquisitions as well as efforts to reduce indebtedness are also driving growth.

In January, Dover reported impressive results for the fourth quarter of 2021, with earnings and sales beating respective Zacks consensus estimates and increasing year-over-year. The company has an earnings surprise for the last four quarters of 12.3% on average.

Strong order conversion and margins to drive growth

Dover has for some time benefited from robust order trends across the majority of its business, driven by strong end-market demand. The company is well positioned to deliver robust top line growth, margin expansion and double-digit earnings per share (EPS) growth in 2022, driven by strong backlog, margin conversion efforts and the benefits of acquisitions. DOV expects adjusted EPS to be between $8.45 and $8.65 for 2022, compared to $7.63 per share reported in 2021. Organic revenue growth is expected between 7 and 9% for 2022 Apart from that, the company’s productivity and cost control initiatives will continue to drive earnings growth.

Well-positioned segments in the face of strong demand

In the engineered products segment, demand for engineered products, vehicle services and industrial automation was strong. Improving price and cost mix, strong backlog and strong bookings across the business will likely support segment margin in 2022. Clean Energy and Refueling segment will benefit from software and underground vehicle washing solutions.

The Imaging & Identification segment will continue to benefit from strong demand for consumables and fast moving consumer goods solutions. The branding and coding business is expected to maintain its growth trajectory with serialization and brand protection software. Digital textile printing is recovering from the pandemic-induced declines seen over the past two years.

In the Pumps & Process Solutions business, demand for biopharma connectors and pumps is likely to be healthy, helped by the COVID vaccine and non-COVID pharma tailwinds. A positive price/cost ratio, volume growth, productivity gains as well as a favorable product and business mix will drive Imaging & Identification and Pumps & Process Solutions margins for the current year.

The Climate and Sustainability Technologies segment will perform well in 2022, given the large backlog and still high order rates. New orders and major food retail business were healthy across all of its product segments. In addition, its heat exchangers and beverage packaging businesses are recording strong order rates.

Other factors

Dover is focused on investing in capacity expansions in high-growth businesses and productivity improvements across its portfolio. Dover has a long history of successful acquisitions in various end markets. It deployed $1.1 billion in nine add-on acquisitions in 2021, including Acme and RegO. These acquisitions contribute to the company’s turnover. Dover will remain active on the buyout front in 2022.

The company’s efforts to reduce debt levels, its strong financial position, prudent capital structure, refinancing efforts and operational execution momentum bode well.

Price performance

Dover shares gained 11.2% last year compared to the industrythe loss of 12.1%.

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Zacks Ranking and Stocks to Consider

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

Some higher ranked stocks in the industrials sector include Applied Industrial Technologies, Inc. ICA, Sonoco Product Company SONS and Silgan Holdings Inc. SLGN. While AIT sports a Zacks rank #1 (strong buy), SON and SLGN currently carry a Zacks rank #2 (buy). You can see the full list of today’s Zacks #1 Rank stocks here.

Applied Industrial Technologies Reported Adjusted EPS of $1.46 in the Second Quarter of Fiscal 2022 (End Dec. 31, 2021), Up 49% YoY and Beating Zacks Consensus Estimate of 1.09 $. AIT has a four-quarter earnings surprise of 27.9% on average.

Applied Industrial Technologies forecasts a 24.8% earnings growth rate for fiscal year 2022. Zacks’ consensus estimate for fiscal year earnings rose 9.4% over the past 60 days. AIT shares have appreciated 9% in one year.

Sonoco’s fourth-quarter 2021 adjusted EPS rose 9.8% year-over-year to 90 cents, beating Zacks’ consensus estimate of 89 cents. SON has a four-quarter earnings surprise of 1.74%, on average.

Sonoco has an estimated earnings growth rate of around 30.9% for 2022. Over the past 60 days, the Zacks consensus estimate for current-year earnings has been revised up by 18, 3%.

Silgan Holdings’ adjusted EPS in the fourth quarter of 2021 rose 32% year-over-year to a record 79 cents, beating Zacks’ consensus estimate of 73 cents. SLGN has a surprise on earnings for the last four quarters of 3.8% on average.

Silgan forecasts a profit growth rate of 13.5% for the current year. The Zacks consensus estimate for 2022 revenue has moved north 3% in the past 60 days. In one year, SLGN grew by 1%.

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