Potential Profit Opportunity from Dover (DOV) Stock As Bullish Sentiment Strengthens After Rosy Outlook

Dover Corporation (NYSE:DOV) stunned investors with its strong operational and financial performances. The company topped revenue and earnings estimates by $40 million and $0.09 per share. Morgan Stanley stated “a solid quarter had been ‘well flagged’ by management, ‘there is no question’ that Dover’s first quarter results and its 2017 forecast boost outperformed buy-side expectations.”

The company’s first quarter revenue increased 12% to $1.8 billion, compared to the same period last year. The strong growth in revenue was driven by acquisition and investments in organic growth opportunities.

In addition, the improving market environment and a rebound in U.S. drilling and production markets, along with a growth in printing & identification, retail fueling, and retail refrigeration markets, added to its booking. Consequently, it’s booking increased by 21% in the first quarter this year.

Furthermore, Dover’s restructuring strategy and investments in high margin areas resulted in massive earnings growth of 25% to $0.70 per share, compared to $0.56 in the year-ago period.

Following higher than expected results, DOV now expects this year’s earnings per share to stand in the range of $4.05-$4.20, higher than the earlier guidance of $3.40-$3.60. It also increased its revenue growth forecast to 13%, reflecting the trend of increasing demand.

U.S. oil companies have started increasing their spending at a double-digit rate after strong capex cuts over the last two years. The strong momentum in DOV’s share price also reflects investor confidence in the company’s future fundamentals. In the last year alone, DOV’s stock price surged 17%. Dover’s share price has further upside potential considering analyst upgrades, the rosy outlook for the following quarters, and the improving market environment. Dover shares also appear undervalued; trading around 21 times to earnings, when the industry average hovers around 26 times.

The author does not own Dover stock.

Alexander is an analyst for EconomicCalendar.com who specializes in index and commodity trading. His outlook is usually near-term to medium-term. He has over 10 years of experience in the financial industry and began his career at the dealing desk. Alexander holds a Bachelor’s degree in Economics from University of Delaware.