When Should You Buy Dover Corporation (NYSE:DOV)?

By
Simply Wall St
Published
November 05, 2021
NYSE:DOV
Source: Shutterstock

Today we're going to take a look at the well-established Dover Corporation (NYSE:DOV). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Dover’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Dover

What's the opportunity in Dover?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14% below my intrinsic value, which means if you buy Dover today, you’d be paying a fair price for it. And if you believe the company’s true value is $200.10, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Dover’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Dover generate?

earnings-and-revenue-growth
NYSE:DOV Earnings and Revenue Growth November 6th 2021

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Dover's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in DOV’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on DOV, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Dover, you'd also look into what risks it is currently facing. Case in point: We've spotted 1 warning sign for Dover you should be aware of.

If you are no longer interested in Dover, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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