Dover Seems To Be Holding Up Well, And Self-Help Has Yet To Materialize

Dover’s (DOV) share price performance over the past quarter has been so-so, only slightly outperforming the overall industrial sector. Still, the company continues to deliver improving margins and decent organic growth at a time when many short-cycle industrials are starting to struggle. With exposure to multiple longer-cycle process markets with healthier near-term fundamentals and a refrigeration business that should be bottoming, I like Dover’s cycle exposure more than many industrials, but weakening orders (down in Q2 after flat performance in Q1) and a possible re-rating of the sector remain concerns.

Valuation is my biggest issue with Dover. I do think the company has a better end-market mix, and that should help the company post relatively better results over the next couple of quarters. On the other hand, the implied returns from my valuation models are on par with those of Honeywell (HON) and “Honeywell or Dover?” isn’t a question that I have to ponder very long.

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Dover Seems To Be Holding Up Well, And Self-Help Has Yet To Materialize