Expectations for robotics and drone solutions
International Data Corporation expects aggregate expenditure on robotics and drone solutions to record an annual growth of 21.1%, or $103.1 billion, in 2018. It expects the aggregate outlay to grow at a 25.4% CAGR (compound annual growth rate) through 2021 to $218.4 billion.
Robotics is expected to account for 90% of total outlay between 2017 and 2021. Industrial robotics solutions could form more than 70% of the total outlay followed by service and consumer robots.
Dover (DOV) has missed three consensus revenue and earnings estimates in the last 20 quarters. Its revenue and EPS have grown at a five-year CAGR of 3.4% and 6.4%, respectively. It has a price-to-sales ratio of 1.5x compared to the sector at 2.2x, the S&P 500 at 2.2x, and the top ten US robotics stocks in terms of market cap.
The company’s PE ratio of 15.9x compares to the sector and S&P 500 at 37.5x and 22.1x, respectively. It has a dividend yield of 2.5% compared to the sector and the S&P 500 at 1.4% and 2.3%, respectively.
DOV stock has fallen 5.8% year-to-date.
What contributed to Dover’s valuations?
So far this year, Dover has made an acquisition, released its fiscal 2017 financial results, elected a new CEO, released its first-quarter financial results, and executed a spinoff.
- The acquisition of Ettlinger Kunststoffmaschinen in January is expected to drive Dover’s position in plastics and polymers processing in its Fluids segment.
- Dover’s revenue grew 15% in fiscal 2017, driven by organic and acquisition growth of 8% and 10%, respectively, partially offset by a 3% impact from dispositions. Its EPS grew 39%, and it completed share buybacks worth $1 billion. It also increased its dividend for the 62nd successive year.
- Richard J. Tobin was elected CEO in March following the retirement of Robert A. Livingston.
- The company’s revenue grew 6% in the first quarter of 2018, driven by organic growth, acquisitions, and positive foreign exchange increases of 4%, 1%, and 4%, respectively, partially offset by a 3% impact from dispositions. Its EPS grew 26% in the quarter.
- In May, the company spun off Apergy, a provider of engineered technologies for drilling and producing oil and gas. Analysts have assigned a negative consensus revenue estimate for the second quarter of 2018.