Six months ago, things were looking pretty good for Dover (NYSE:DOV).
The company was looking to leverage its supply chain for further margin
expansion, while expecting growth from the retail adoption of "close
the case" refrigeration equipment, further expansion of the downstream
chemical and plastic capacity, and strong drilling growth across North
American basins.
I thought Dover was a little too expensive then,
but I had no idea what was in store for the company. Six months ago, oil
was above $100, and the nosedive below $50 has radically altered the
drilling plans of energy companies, leading to a major revision in
Dover's growth expectations and the prospect of at least a couple of
"lost years" in the growth/self-improvement story.
I don't believe
Dover has suddenly become a bad company, but the company's heavy
weighting toward energy for a significant percentage of its earnings
leaves it vulnerable to feast-or-famine swings, and I don't think the
other businesses are strong enough to compensate. Although I think it is
possible to make a value call here, it's hard to imagine investors
warming up to Dover so long as rig counts and capital budgets are still
heading down.
Please follow this link for more:
Dover Dealing With A Very Different Reality
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