Dover Corporation (NYSE:DOV) defied analyst predictions to release its quarterly results, which were ahead of market expectations. Dover beat earnings, with revenues hitting US$1.5b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 16%. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus, from the 14 analysts covering Dover, is for revenues of US$6.49b in 2020, which would reflect a perceptible 3.9% reduction in Dover’s sales over the past 12 months. Statutory earnings per share are expected to reduce 6.2% to US$4.38 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$6.43b and earnings per share (EPS) of US$4.12 in 2020. So the consensus seems to have become somewhat more optimistic on Dover’s earnings potential following these results.
The consensus price target rose 8.7% to US$116, suggesting that higher earnings estimates flow through to the stock’s valuation as well. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Dover at US$127 per share, while the most bearish prices it at US$100.00. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.9%, a significant reduction from annual growth of 0.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 7.4% annually for the foreseeable future. It’s pretty clear that Dover’s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Dover’s earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Dover analysts – going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we’ve spotted with Dover .
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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