Dover (DOV)
hasn't been my favorite industrial name, largely because of what I
believe to be inefficient operations and bloated expenses (leading to
less impressive returns on capital) and arguably a less than ideal
collection of business. With a new CEO coming into the company from
outside (previously the CEO of CNH Industrial (CNHI)),
I'd hoped that the company might become more dynamic in addressing its
cost issues and perhaps consider more portfolio restructuring
activities. While the September 11 analyst day doesn't suggest any
dramatic changes are coming, I like the overall direction and philosophy
the new CEO is taking with Dover.
Valuation is a
little more challenging now. The shares have outperformed industrial
peers since the second quarter, in part I believe on improved guidance
and healthy orders, but also in anticipation of the analyst day
announcements. Although the shares look pretty fully valued on the basis
of near-term numbers, successfully executing on cost cuts/margin
enhancement efforts and deploying capital toward buybacks could
significantly increase EPS in 2020 and beyond relative to current
expectations.
Read more here:
Dover's Analyst Day Offers Some Encouraging Signs
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