Conglomerate Dover (DOV) Ripe for the Picking - Barron's (AAPL)
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Dover Corp. (NYSE: DOV) is seeing some upside today following a positive outlook in Barron's over the weekend. Shares of the company are up 0.3% this afternoon.
Dover, which makes everything from microphones for Apple's (Nasdaq: AAPL) iPhone and diamond inserts used in oil & gas drilling operations, has seen revs up as much as 23% from levels seen in 2009. Additionally, Barron's notes that operating margins are on pace to exceed 16% for the year, with earnings popping 70% and free cash flow expected to equal net income in the $700 to $800 million range. Free cash flow is also hypothesized to be $2.5 billion from FY11 - FY13.
The company also has $2 billion in cash and borrowings available for M&A, one of its key growth drivers.
Dover is also one of S&P's "dividend aristocrats," which have increased their dividend every year for at least the past 25 years. At the current annualized rate of $1.10, the dividend yields about 2%.
Management is looking for a revenue CAGR of 7% over the next several years, with operating margins in their five main business segments increasing 18% on average. M&A could add 3% - 5% of top-line growth annually.
Their CEO, Robert Livingston, who has been on the job since December 2008, has made moves to streamline operations and cut costs. Dover has reduced the number of transportation suppliers from 250 to 17, and metal suppliers from 300 to 30. Cost savings for FY11 could reach about $100 million stemming from the moves.
Livingston is also focusing the company on more emerging markets; revenues for Asia came in stronger than Europe for the first time ever.
Amid the stock moving 30% higher this year, Barron's thinks that they shares are still attractive at the $54 - $55 range. Some bulls on the stock put a price target of $70 on the shares, suggesting another 27% of upward movement.
A little weakness was seen in the shares following their Q310 earnings release at the end of October due to a lower book-to-bill ratio and Q410 outlook that came in just shy of expectations. Most of the lag could be attributed to Hill Phoenix, which sees a little extra downside as retailers delay new construction and store remodeling. Hill, which produces commercial-grade food cases, is already seeing a backlog building for Q111.
But investors should give a second look to the diversified mega-conglomerate to better diversify their portfolio as economic recovery continues to take hold.
Dover, which makes everything from microphones for Apple's (Nasdaq: AAPL) iPhone and diamond inserts used in oil & gas drilling operations, has seen revs up as much as 23% from levels seen in 2009. Additionally, Barron's notes that operating margins are on pace to exceed 16% for the year, with earnings popping 70% and free cash flow expected to equal net income in the $700 to $800 million range. Free cash flow is also hypothesized to be $2.5 billion from FY11 - FY13.
The company also has $2 billion in cash and borrowings available for M&A, one of its key growth drivers.
Dover is also one of S&P's "dividend aristocrats," which have increased their dividend every year for at least the past 25 years. At the current annualized rate of $1.10, the dividend yields about 2%.
Management is looking for a revenue CAGR of 7% over the next several years, with operating margins in their five main business segments increasing 18% on average. M&A could add 3% - 5% of top-line growth annually.
Their CEO, Robert Livingston, who has been on the job since December 2008, has made moves to streamline operations and cut costs. Dover has reduced the number of transportation suppliers from 250 to 17, and metal suppliers from 300 to 30. Cost savings for FY11 could reach about $100 million stemming from the moves.
Livingston is also focusing the company on more emerging markets; revenues for Asia came in stronger than Europe for the first time ever.
Amid the stock moving 30% higher this year, Barron's thinks that they shares are still attractive at the $54 - $55 range. Some bulls on the stock put a price target of $70 on the shares, suggesting another 27% of upward movement.
A little weakness was seen in the shares following their Q310 earnings release at the end of October due to a lower book-to-bill ratio and Q410 outlook that came in just shy of expectations. Most of the lag could be attributed to Hill Phoenix, which sees a little extra downside as retailers delay new construction and store remodeling. Hill, which produces commercial-grade food cases, is already seeing a backlog building for Q111.
But investors should give a second look to the diversified mega-conglomerate to better diversify their portfolio as economic recovery continues to take hold.
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