Sunday, September 16, 2018

Dover's Analyst Day Offers Some Encouraging Signs

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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