Company of the Week: Dover Corp (DOV)

Each Tuesday we will do a detailed analysis of one of the companies in our valuation database.  This week’s featured company is Dover Corporation (DOV).

View the full DOV chart at Wikinvest

Company Profile (obtained from Google Finance):  Dover Corporation (Dover) owns and operates a global portfolio of manufacturing companies providing components and equipment, specialty systems and support services for a variety of applications in the industrial products, engineered systems, fluid management and electronic technologies markets. The Company operates in four business segments: Industrial Products, Engineered Systems, Fluid Management and Electronic Technologies. The products designed, manufactured, assembled and/or serviced by the Company includes material handling equipment, mobile equipment related products, engineered products, product identification related products, energy market production and distribution products, fluid solution products, and electronic technology equipment and devices/components. On April 1, 2008, it acquired Brady’s Mining & Construction Supply Co. On April 10, 2008, it acquired Neptune Chemical Pump Company. On December 31, 2008, it acquired Hiltap Fittings Ltd.

Business and Management Review

1) Is the business simple and understandable?

Dover Corporation is in the business of manufacturing components, equipment and providing support services for many markets related to manufacturing.  Specifically, Dover has a history of acquiring smaller companies that provide these products, improving the companies’ management, and thus creating further value in their acquisitions.  Overall Dover has a simple and understandable business model – find well positioned businesses to purchase, improve their internal operations and management, and create synergy and value as a result.

2) Does the business have a consistent operating history?

Dover Corporation has a significantly consistent operating history on many levels.  Financially, they have increased their dividend rate on an annual basis for 50 straight years, the fourth longest record on the New York Stock Exchange.  In addition, they have achieved a positive net income for at least the last ten years.  On a management standpoint, the business strategy of acquiring businesses and creating value in them has been the same since the beginning of the company in 1955.  Funding Universe provides a great outline of Dover’s corporate history here.

3) Does the company have favorable long term prospects?

We have faith that the current management will continue to build on the success of the last 50 years for this company.  While growth may slow in this contracted economy, over the long-term it is likely that Dover will continue to excel at acquiring strong businesses and making them stronger.  You can view a detailed explanation of their acquisition requirements here.

4) Is management rational?

The management of Dover has a strong and detailed outline for what companies they will consider acquiring.  We believe that the requirements of the companies are realistic and rational for a company looking to acquire very strong businesses that have opportunities for further growth.

5) Is management candid with its shareholders?

We were quite impressed with Dover’s website as far as the inclusion of the acquisition requirements go.  In addition, we liked the interactive version of the annual report; however, we would have liked to see more information about the operating history of the company provided on the website.  You can view the investor relations page here.

Data of Interest

Our Valuation: You can view our quantitative valuation following Benjamin Graham's formula and guidelines from The Intelligent Investor on this page:  Dover Corporation (DOV) Valuation







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