Dover (DOV) reported stronger-than-expected Q2 results, topping revenue estimates, driven by robust new order activity as well as revenue and margin growth across all segments. Shares of the manufacturer of industrial products gained 6.7% on July 20 to close at $162.14.
The company reported adjusted earnings of $1.82 per share, one cent lower than analysts’ expectations of $1.83 per share. Revenues of $2.03 billion exceeded the consensus estimate of $1.89 billion.
Meanwhile, earnings per share jumped 112% while revenue grew 36% on a year-over-year basis. The company reported earnings of $0.86 per share in the prior-year period.
The company said that the backlog remains at record-high levels. During the second quarter, the total consolidated backlog grew to $2.6 billion compared to $1.5 billion reported in the year-ago period. (See DOV stock charts on TipRanks)
Aligning with its strategic initiatives, the company made three acquisitions in single-use pumps, brand protection software, and IoT dispensing solutions during the quarter.
Dover’s CEO, Richard J. Tobin, commented, “Our forecast for the balance of the year reflects the expectation that logistics constraints and input cost inflation will neither deteriorate nor improve materially. Despite this dynamic, we believe that our localized manufacturing and sourcing strategy and diverse business mix give us distinct advantages to win in the current demand environment.”
Based on strong Q2 results and impressive backlog and bookings levels, the company raised its guidance for Fiscal 2021. The company now forecasts adjusted earnings in the range of $7.30 to $7.40 per share. EPS was previously expected to range between $6.45 and $6.55. Revenue is projected to grow at 17% compared to FY2020 versus previously guided growth of 15%.
Following the strong Q2 results, Robert W. Baird analyst Mircea Dobre increased the price target on the stock from $162 to $176 (8.6% upside potential) and reiterated a Buy rating.
Dobre increased the price target based on the impressive 30% organic growth, 69% backlog growth, and 420bps margin expansion reported by the company despite cost-related and other operating challenges faced during the quarter.
Consensus among analysts is a Moderate Buy based on 4 Buys and 5 Holds. The average Dover price target of $164.75 implies 1.6% upside potential to current levels.
Dover scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.