Over the last six months, Dover’s shares have sunk to $191.08, producing a disappointing 13.9% loss - a stark contrast to the S&P 500’s 11.7% gain. This may have investors wondering how to approach the situation.
Is now the time to buy Dover, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is Dover Not Exciting?
Even with the cheaper entry price, we’re sitting this one out for now. Here are three reasons you should be careful with DOV, plus one stock we’d rather own.
1. Slow Organic Growth Suggests Waning Demand In Core Business
Investors interested in General Industrial Machinery companies should track organic revenue in addition to reported revenue. This metric gives visibility into Dover’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Dover’s organic revenue averaged 2.3% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations. 
2. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Dover’s EPS grew at 7.7% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 2.5% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
3. New Investments Fail to Bear Fruit as ROIC Declines
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
Over the last few years, Dover’s ROIC averaged 2 percentage point decreases each year. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.
Final Judgment
Dover isn’t a terrible business, but it isn’t one of our picks. Following the recent decline, the stock trades at 16.8× forward P/E (or $191.08 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We’re pretty confident there are superior stocks to buy right now. We’d recommend looking at one of our top digital advertising picks.
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