Dover Gains From Solid Bookings Despite Low Aerospace Volumes

Dover Corporation DOV is gaining from its solid order booking, cost-reduction initiatives and execution of margin targets. The company is focused on investments in capacity expansions in high-growth businesses and productivity improvements across its portfolio. Dover has been implementing restructuring programs to better align costs and operations with current market conditions.

However, DOV has been witnessing lower volumes in its aerospace and defense sector for the past few quarters. Its margins are likely to bear the brunt of supply-chain issues. Labor constraints are expected to create a stumbling block in the upcoming quarters.

Factors Driving Dover’s Stock

Strong Booking Levels: DOV’s bookings remain healthy across most of its segments. It recorded positive organic booking growth consecutively in the last six quarters. The company expects this trend to continue for the remainder of the year.

This is being driven by strong demand across the majority of the company’s business, and its ability to produce and ship despite several operating challenges. Solid new order intake also continues to aid growth. Backed by solid booking levels, the company anticipates year-over-year revenue growth of 2-4% for 2025.

Solid Strategic Actions: Dover will gain from product digitization, e-commerce, product development and investment in core business platforms. The company is focused on investments in capacity expansions in high-growth businesses and productivity improvements across its portfolio. 

DOV continues to execute restructuring programs to better align costs and operations with current market conditions through targeted facility consolidations, headcount reductions and other measures, which will support the company’s margins.

Strategic Portfolio Optimization: Dover has a long tradition of making successful acquisitions in diverse end markets.

On Jan. 13, 2025, DOV announced that it acquired certain assets of Carter Day International, Inc.'s petrochemical division. The assets became part of Dover’s MAAG business unit within the Pumps & Process Solutions segment. The acquisition strengthens MAAG's pelletizing-system portfolio of dewatering and drying equipment for the plastics industry with highly engineered products and patented technologies. It adds high-volume dryer technology to Dover's portfolio.

On May 5, 2025, the company announced that it inked a deal to acquire SIKORA AG for €550 million ($624 million) in cash. After closing, SIKORA will be integrated into Dover's MAAG group, which is part of the Pumps & Process Solutions segment. The deal is expected to close in the second quarter of 2025.

In April 2024, the company sold its De-Sta-Co business to the industrial and automotive supplier Stabilus SE for $680 million in enterprise value.

In October 2024, Dover sold ESG Group to Terex Corporation TEX in a $2-billion all-cash transaction. This deal with TEX will reduce DOV’s exposure to cyclical capital goods. 

These moves will help DOV focus its efforts and capital deployment on growing its core platforms.

Strong Financial Position: Dover continues to lower its debt levels and strengthen its balance sheet. DOV’s strong financial position, prudent capital structure, refinancing efforts and momentum in operational execution poise it well to navigate through the current turbulent situation.

The company also started an accelerated share repurchase program to return excess capital to shareholders while preserving sufficient liquidity for value-creating investments.

Near-Term Concerns for DOV

In the first quarter of 2025, the Engineered Products segment’s revenues were impacted by lower volumes in vehicle services. The Engineered Products segment, primarily vehicle services, remains the most exposed to tariffs.

Dover is also facing reduced volumes in its aerospace and defense business. These are likely to weigh on DOV’s 2025 top line. Dover expects adjusted EPS between $9.20 and $9.40 for 2025. The mid-point indicates a dip of 1% from the 2024 reported level.

DOV has been witnessing input cost inflation for the past few quarters. The company’s selling, general and administrative costs increased 6.3% year over year in 2024, and the same is expected to be high in 2025 as well. Supply-chain challenges and labor constraints are likely to persist and keep denting margins.

Dover Stock’s Price Performance

The company’s shares have gained 1% in the past year compared with the industry’s decline of 4.8%.

DOV’s Zacks Rank & Stocks to Consider

Dover currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Industrial Products sector are Life360, Inc. LIF and Federal Signal Corporation FSS. LIF sports a Zacks Rank #1 (Strong Buy) and FSS has a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

Life360 delivered an average trailing four-quarter earnings surprise of 415%. The Zacks Consensus Estimate for LIF’s 2025 earnings is pinned at 24 cents per share, which indicates a year-over-year upsurge of 500%. Life360’s shares have skyrocketed 125% in a year.

Federal Signal delivered an average trailing four-quarter earnings surprise of 6.4%. The Zacks Consensus Estimate for FSS’ 2025 earnings is pinned at $3.83 per share, which indicates year-over-year growth of 14.6%. The company’s shares have gained 10% in a year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research