Dover Corporation (DOV)

Conclusion

Dover Corporation is a US industrial company that makes equipment, components, aftermarket parts and software for vehicle service, aerospace and defence, fuel handling, marking and coding, and pumps and process solutions. Its shares closed at 212.98 USD on 2026-11-09, giving a market capitalisation of 28.33 billion USD.

The verdict is overvalued. The company trades on a P/E of 24.29 against a ten-year median of 22.58, an EV/EBITDA of 15.49 against 15.23, and a P/FCF of 23.87 against 23.15. The DCF gives 121.24 USD per share, and the fair value band runs from 131.11 to 196.66 USD with a midpoint of 163.89 USD, a margin of safety of -23.1% at the current price. The fair value from historical multiples is 206.53 USD. The reverse DCF implies growth of 11.3% a year, while revenue grew 3.9% a year over five years and free cash flow per share grew 4.6%.

The case rests on a strong balance sheet and a return on invested capital of 13.3% against a WACC of 9.7%. The Altman Z-score of 5.55 and net debt of 0.81 times EBITDA are the strongest supports. The weakest numbers are the three-year revenue growth of 1.0%, the five-year free cash flow conversion of 62.1%, and the price-to-sales premium of 25.2% over its ten-year median. If the growth the market expects does not arrive, the current price has little support from the cash flows.

Financial health

Financial strength is green, held up by the Altman Z-score of 5.55 in the safe zone, net debt to EBITDA of 0.81, interest coverage of 13.3 times and a current ratio of 1.95. The quick ratio of 1.28 and debt to equity of 0.43 add further comfort. Liabilities are modest relative to earnings and assets.

Insolvency risk: low, about 0.3% by the estimate of the Ohlson model over one to two years. This is an estimate, not a forecast of default. The company does not report a debt maturity schedule in the data provided, so the timing of future repayments cannot be checked here.

Earnings quality

Earnings quality is yellow, because the free cash flow record is mixed. Free cash flow conversion is 101.8% on a trailing twelve-month basis but only 62.1% over five years. The accrual ratio of -1.9% is favourable, and stock-based compensation is small at 0.5% of revenue, leaving free cash flow after compensation of 1.15 billion USD.

The share count fell at a compound rate of 1.0% over five years, consistent with buybacks. The Piotroski score is 6 out of 9 evaluable tests. The Beneish M-score is not available. Dover beat earnings estimates in all 8 recent quarters, with an average surprise of 2.4%. Estimate revisions are mixed: for the current year, 8 analysts raised and 7 lowered estimates in the last 30 days, while for next year 12 raised and 4 lowered, with expected growth of 10.3%.

Profitability

Profitability is green. The gross margin is 39.7% against a ten-year median of 37.0%, the operating margin is 17.1% against 14.8%, and the net margin is 13.6% against 12.2%. Margins have been consistently at or above their historical medians.

Return on invested capital is 13.3% against a WACC of 9.7%, and the given ROIC minus WACC value is 3.6%, so the business creates value. The five-year median ROIC is 13.4%. Return on equity is 15.3%. The DuPont split shows a net margin of 13.5%, an asset turnover of 0.60 and an equity multiplier of 1.81, so leverage contributes only a modest part of the return.

Growth

Growth is green, but the top line is slow. Revenue grew at a compound rate of 1.0% over three years, 3.9% over five years and 1.5% over ten years. Revenue rose in 6 of 10 comparable years.

Earnings per share have grown faster: 2.2% over three years, 11.0% over five years and 3.8% over ten. Free cash flow per share grew 25.8% over three years, but only 4.6% over five and 5.0% over ten. The recent acceleration in earnings and cash flow is therefore not yet visible in the longer record.

Valuation

Valuation is red. The verdict is overvalued, with a margin of safety of -23.1% at a price of 212.98 USD. The P/E of 24.29 is a premium of 7.6% to its ten-year median of 22.58, and the EV/EBITDA of 15.49 is a premium of 1.7% to 15.23. The P/FCF of 23.87 is a premium of 3.1% to 23.15, the P/S of 3.30 is a premium of 25.2% to 2.64, and the P/B of 3.71 is a discount of 20.5% to 4.66.

The DCF gives 121.24 USD per share, using a discount rate of 10.4%. The reverse DCF implies growth of 11.3% a year, against 3.9% revenue growth and 4.6% free cash flow per share growth over five years. The dividend yield is 0.99% with a payout of 23.7% of free cash flow. The DCF is an order-of-magnitude estimate built on fixed assumptions, not a price target.

Risks

The main risk is that growth stays near its recent pace. Three-year revenue growth of 1.0% and five-year free cash flow conversion of 62.1% would weaken the case that the current price needs, and the reverse DCF implies 11.3% growth. A slowdown in estimate upgrades, currently 12 raised against 4 lowered for next year, would also weigh on the multiples.

Valuation risk is material. The price-to-sales premium of 25.2% and the DCF value of 121.24 USD leave the shares exposed if the market reverts to the ten-year medians. The Piotroski score of 6 and the unavailable Beneish M-score leave some uncertainty about earnings quality.

This analysis has limits. It has no debt maturity schedule and no revenue by segment, so the exposure of each business line to the weaker growth numbers cannot be judged.