Dover Corporation (DOV) was founded in 1955 year. Company is a conglomerate manufacturer of different industrial products:

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Business is diversified, but as we can see weakness of oil prices significantly affects Energy segment -> investments were reduced by oil producers. Also strong USD is negatively impacting revenues.

As it comes to 2016 company expects to grow in every segment apart from Energy and what’s important to add, that these assumptions are made with oil price around $40.

Historically margins were raising, which means that company’s competitive position is further improving.

I love capital deployment. Low CAPEX, concentration on return to investors and steady growth by acquisitions.

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As it comes to financials (estimates):

Market cap ~ $10B

Net debt ~$2.5B

Payout ratio ~50%

Beta = 1.4

Dividend yield 2.6% + share buyback in 2015 around $600m, 6% yield, decent result.

 

Estimated valuation ratios:

EV/EBITDA = 10

P/E = 17.5

 

Dover is one of The Dividend Kings paying increasing dividends since 1956 year. Currently dividend yield is around 2.6% – quite good result + decent buyback. Historically yield was even up to 4% in crisis, but yield below 2% were also observable. So it might be a good idea!

 

Drawdown risk analysis:

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Recently share price rebounded from $52 to around $63. Obviously no one will always buy at bottom but what I think is that current valuation is getting attractive. I think that in case of share slide to $5x I will buy some shares, let’s say $58 would be strong buy for me.

 

Summing up, I do not really feel this business as it is mostly B2B, but I see, that valuation is quite attractive, history of 60 years of rising dividends is impressive and all I need to buy is some more discount.

 

Disclosure DOV – no position