Dover Corp (NYSE:DOV) produces a diverse array of products for use in various industrial applications. With an ambitious growth strategy as well as exposure to industries such as communications and energy that should thrive in the coming years, Dover Corp (NYSE:DOV) looks to be a diverse way to add exposure to sometimes volatile sectors to your portfolio. The only question is whether or not shares are a good value, or would our investment dollars be put to better use with one of Dover Corp (NYSE:DOV)’s competitors?
About Dover’s business segments
Dover Corp (NYSE:DOV) has grown and diversified its business tremendously, and has completed over 100 acquisitions since 2000. Currently, Dover Corp (NYSE:DOV)’s business is broken down into four segments, each with a very different product portfolio and customer base.
The largest segment is Engineered Systems, which accounts for 42% of Dover Corp (NYSE:DOV)’s sales, and manufactures fluid solutions products such as pumps, compressors, and dispensing systems, as well as industrial refrigeration systems such as the display refrigerators and freezers used in supermarkets. The Energy segment (27% of sales) produces products for use in oil and gas exploration and drilling such as pumps and lifting equipment, valves, nozzles, and more.
The Communication Technologies segment (19%) produces electronic and other products for an extremely wide range of communications applications, from fighter jets to mobile handsets to medical devices such as hearing aids. Finally, the Printing & Identification segment (12%) produces equipment for marking and coding products, such as with barcodes.
Growth, valuation, and expectations
As mentioned earlier, acquisitions have been a major part of Dover’s growth strategy, with $2.6 billion worth of acquisitions completed in just the last three years. Dover is truly an international company, and a focus of its acquisition strategy is to increase its global footprint. Currently, just under half of the company’s business is international, mostly from Europe and Asia.
Going forward, I think that most of the growth in Dover’s existing business with be through the Energy and Communications businesses. With world energy demand expected to pick up tremendously in the coming years, mainly due to emerging markets, the rate at which new oil rigs are built is expected to increase significantly. Communications should benefit from the fast evolution of the mobile handset market, and more rapid development will mean a greater need for the parts produced by Dover.