Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Dover Corporation's (NYSE:DOV) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
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Did DOV perform worse than its track record and industry?
DOV's trailing twelve-month earnings (from 31 March 2019) of US$587m has declined by -16% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -3.3%, indicating the rate at which DOV is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and if the entire industry is experiencing the hit as well.
In terms of returns from investment, Dover has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.2% exceeds the US Machinery industry of 7.5%, indicating Dover has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Dover’s debt level, has increased over the past 3 years from 13% to 14%.
What does this mean?
Dover's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. In some cases, companies that face a drawn out period of diminishing earnings are going through some sort of reinvestment phase with the aim of keeping up with the recent industry disruption and growth. I recommend you continue to research Dover to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for DOV’s future growth? Take a look at our free research report of analyst consensus for DOV’s outlook.
- Financial Health: Are DOV’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.