Improving Energy Buys Dover Some Breathing Room

Conditions are getting better at Dover (NYSE:DOV), but it's certainly not a symmetrical improvement at this point. The energy market is definitely getting better, whether you look at rig counts, Dover's organic growth, or its orders, but there are still some meaningful challenges in Dover's other businesses; challenges that have to be addressed if this is going to be a long-term winner.

Dover has done alright since my last update, and I think my outlook for segments like Engineered Systems and Fluids are relatively conservative. A recovery in the energy business ought to drive meaningful improvements in margins, and coupled with an expanded retail fueling business, that bodes well for overall performance. I also believe there are long-term opportunities here in polymer equipment, energy automation, refuse, auto service, and printing/ID that shouldn't be ignored. I still think management has to re-earn some credibility, but the risk/return opportunity is a little more interesting here than with most industrial conglomerates, and there is also the potential for outperformance.

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Improving Energy Buys Dover Some Breathing Room