Dover Proving That It Has Changed For The Better

There were questions going into the next downturn as to whether Dover (DOV) management really had restructured the company to be less cyclically-vulnerable and capable of producing better full-cycle margins. While nothing about the Covid-19 downturn has been normal, Dover's performance has converted a lot of analysts and investors into believers, and for good reason.

Dover was in the bucket of "really like the company, but the valuation is so-so" stocks for me after the first quarter. The shares have since done a little better than the average industrial, but names I liked better (including ITT (ITT), Johnson Controls (JCI), and Parker-Hannifin (NYSE:PH)) did still manage to do better. At this point, Dover's better-than-peer performance (particularly with incremental/decremental margins) has definitely supported valuation, and I like Dover's mix of short-cycle upside and acyclical long-term growth.

Valuation/upside here seems broadly similar to that of 3M (MMM) or Honeywell (HON), with 3M offering more short-cycle leverage (but more operational risk) and Honeywell offering a lot less (but arguably higher, long-term quality).

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Dover Proving That It Has Changed For The Better