Back in February, I thought that Dover (NYSE:DOV) looked undervalued on the basis of long-term fundamentals, but that it "lacked a spark". The shares have done better than I expected since then, rising about 20% and moving past my high $60's fair value; that performance was a bit better than 3M's (NYSE:MMM), and quite a bit better than Honeywell's (NYSE:HON), but not as good as Illinois Tool Works' (NYSE:ITW) or Atlas Copco's (OTCPK:ATLKY) (all of which I liked better as companies and long-term prospects).
With more cuts to guidance since then and signs of weakness outside of energy, I remain concerned about Dover. In particular, above and beyond general market and macro weakness, I'm concerned about how Dover's management portrays and models its performance and that there's no real value to this company's conglomerate structure. While on one hand that could make Dover an interesting activist target, it could also mean middling (or worse) performance if it sticks to its recent operating philosophy.
Dover Needs To Do Better