Does Dover’s Recent Share Drop Signal a Hidden Opportunity in 2025?

If you’re watching Dover’s stock price, you probably know how important it is to separate day-to-day noise from the bigger picture. The stock has seen quite a ride lately, with a dip of 3.1% over the past week and an even steeper drop of 13.0% since the start of the year. Some might feel wary. But a quick look further out reveals a story of resilience: Dover is still up 40.2% over three years and 51.1% over five years. These moves suggest that short-term worries are being weighed against long-term confidence in the business.

Shifts in Dover’s share price often reflect changing market expectations, and recent performance hints that investors may be reassessing the company’s prospects in light of broader industrial sector developments. Risk perception seems to be in flux, but the bigger question is whether those worries have pushed Dover’s valuation below its true worth.

That’s where things get interesting. Dover currently scores a perfect 6 out of 6 on our value checks, indicating the company appears undervalued by every metric we track. This strong result sets the company apart from many of its peers.

Up next, I’ll break down which valuation methods we use and show how Dover stacks up. Plus, I’ll share a perspective at the end that could be even more telling for value-focused investors.

Why Dover is lagging behind its peers

Approach 1: Dover Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a company is truly worth by projecting its future cash flows and then discounting those amounts back to their value today. For Dover, this method starts by considering the company’s latest Free Cash Flow, which is $555 million.

Analyst estimates indicate steady growth in cash flows, reaching $1.33 billion by 2026 and $1.62 billion by 2028. Since analyst coverage extends only so far, later years are extrapolated to reach around $2.14 billion by 2035. This approach helps capture both near-term expectations and longer-term momentum.

After discounting these projected cash flows, the DCF model arrives at an intrinsic value per share of $220.02. Based on recent Dover share prices, this implies the stock is currently trading at a 26.6% discount to its fair value. In other words, according to cash flow projections, Dover appears materially undervalued at the moment.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Dover.

Our Discounted Cash Flow (DCF) analysis suggests Dover is undervalued by 26.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Dover Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a common valuation tool for profitable companies like Dover, since it directly reflects how much investors are willing to pay for each dollar of earnings. PE ratios help gauge whether a stock is expensive or cheap relative to its profitability, making them especially reliable when profits are steady and visible.

It is important to remember that the "right" PE multiple for a company varies with growth prospects and perceived risks. A higher expected earnings growth often justifies a higher PE, while greater risks typically push the fair level down. For Dover, the current PE ratio stands at 20.7x. How does this compare? It is below the Machinery industry average of 23.4x and also below the peer group’s 22.5x, suggesting that Dover’s shares can be bought at a relative discount.

Simply Wall St calculates a proprietary Fair Ratio, which incorporates not only Dover’s growth, industry, and profit margins, but also specific company risks and its market cap. This approach is a more nuanced benchmark than industry or peer averages because it captures the unique blend of performance and risk for each stock. For Dover, the Fair Ratio is 24.6x, which is noticeably higher than its current multiple.

Since Dover trades at 20.7x and the Fair Ratio is 24.6x, the implication is that shares are undervalued even after considering all company-specific fundamentals and risks.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Dover Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is a clear, simple story or viewpoint you bring to a company. It reflects your perspective on what its future looks like and what you believe it is worth, based on your own assumptions about revenue, earnings, and margins. Narratives bridge the gap between a company’s story and its financial forecast, linking your personal beliefs to an estimated fair value in a few easy steps.

Narratives are available to all investors directly within Simply Wall St's Community page, used by millions to share and compare their views. This tool allows you to see how the story you believe about Dover translates into a fair value, making it much easier to judge whether to buy or sell by comparing this fair value to the current share price. The real strength is that Narratives are always up to date. Your valuation and outlook respond instantly to new events, earnings, or news, so your decisions evolve alongside the market.

For example, one investor might see long-term earnings growth from data center and clean energy demand and set Dover’s fair value at $235.0, while another worries about macro risks and assigns just $168.0. Both perspectives and Narratives can be reviewed and built on yourself.

Do you think there's more to the story for Dover? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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