Dover (DOV) Closes Malema Buyout, Boosts Biopharma Portfolio

Dover Corporation DOV recently completed the previously announced acquisition of Malema Engineering Corporation. It will become part of the PSG business unit within DOV’s Pumps & Process Solutions segment and enhance its biopharma single-use production offering, which includes Quattroflow pumps, CPC connectors, and em-tec flowmeters.

Boca Raton, FL-based Malema is a designer and manufacturer of high-precision, mission-critical flow-measurement and control instruments serving customers in the biopharmaceutical, semiconductor, and industrial sectors. It has facilities in San Jose, CA, Singapore, South Korea, and India. Malema is expected to generate approximately $40-45 million in revenues in 2022.

Malema brings with it a loyal base of blue-chip customers, original equipment manufacturers and end-users with substantial aftermarket and recurring revenue streams. Malema's first-of-its-kind single-use flow sensor utilizing Coriolis technology offers superior flow-measurement performance and accuracy compared to alternative technologies. It aids in minimizing the scope for measurement error and eliminates the need for calibration in time-sensitive and contamination-intolerant environments.

Dover is working toward building its biopharma platform through proactive capacity additions, new product developments, and opportunistic acquisitions of highly-attractive niche component technologies. The bioprocessing industry is full of long-term growth opportunities, courtesy of a robust pipeline of effective novel biologic drugs, biosimilars, protein therapies, non-COVID mRNA vaccines, as well as budding cell & gene therapies. The growing adoption of more efficient single-use production processes will support demand for the company’s offerings of single-use components to end customers. Integrating Malema's technology with Dover’s existing portfolio of single-use pumps for biopharma processing will enhance the accuracy and value proposition of solutions to its customers.

In 2020, Dover acquired Em-tec, a leading designer and manufacturer of flow measurement devices that serve a wide array of medical and biopharmaceutical applications. It became part of the PSG business unit and expanded Dover’s reach into biopharma and other hygienic applications, and enhanced its portfolio of flow control technologies with flow rate sensors. Dover has a long tradition of making successful acquisitions in diverse end markets, which has been contributing to its growth.

Mergers and acquisitions contributed to the top-line growth of $53 million in the first quarter of 2022. Strong demand and robust order and backlog rates supported the top-line growth across the majority of the company’s businesses during the quarter. Total revenues increased 10% year over year to $2,052 million. Dover reported adjusted earnings per share (EPS) of $1.90, which improved 5% year over year. In April, Dover acquired certain intellectual property associated with electrically operated refuse collection vehicle bodies from Boivin Evolution Inc. The buyout will expand the technological footprint and product portfolio of Dover’s Environmental Solutions Group business unit within its Engineered Products segment.

Dover expects adjusted EPS between $8.45 and $8.65 for 2022. It expects organic revenue growth of 7-9% for the year. Robust demand and record backlog levels will continue to drive the company’s revenues in the current year.

Price Performance

Dover’s shares have fallen 21.1% over the past three months compared with the industry’s decline of 11.6%.

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Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector are Greif Inc. GEF, Titan International TWI and RBC Bearings ROLL. While GEF and TWI each flaunt a Zacks Rank #1 (Strong Buy), ROLL carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an estimated earnings growth rate of 36% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.

Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. The company’s shares have gained 3% in three months' time.

Titan International has an estimated earnings growth rate of 112% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 55%.

Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have appreciated 5.5% in the last three months.

RBC Bearings has an expected earnings growth rate of 50% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 7% in the past 60 days.

RBC Bearings has a trailing four-quarter earnings surprise of 3.4%, on average. ROLL’s shares have increased 3% over the past three months.

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