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Dover (DOV) Buys Espy, Expands Radio Frequency Solutions

·4 min read

Dover Corporation DOV has acquired a leading provider of signal intelligence solution— The Espy Corporation (Espy). The company will now be a part of Dover Engineered Products segment’s Microwave Products Group (“MPG”) business.

Based in Austin, TX, Espy is a global manufacturer of advanced electronic radio frequency sensor systems that are used to detect, record, analyze and geolocate signals. The company offers signal intelligence systems with integrated software. Espy's exclusive machine learning and real-time geolocation technology, along with its software interface, not only take significantly less time to identify and process signals of interest, but also provide greater accuracy on the origin of the signal.

MPG is a leading global provider of mission-critical engineered electronic components and subsystems. The latest buyout supports MPG’s focus on growing signal intelligence as global demand for radio frequency detection and spectrum analysis is on rise with increased penetration and sophistication of radio communications. In fact, the deal allows MPG to offer an advanced radio frequency signal solution to several defense industry end-markets, further enhancing its technological leadership in radio frequency applications. Both of the companies’ complementary product offerings and customer bases will create significant cross-selling opportunities.

Dover has a long tradition of making successful acquisitions in diverse end markets. This July, the company acquired CDS Visual, Inc. to expand Industrial 3D Visualization Solutions across its portfolio and distribution network. CDS Visual will become part of Dover’s Engineered Products segment. CDS Visual is a leading provider of software as a service (SaaS) 3D-visualization solution for industrial applications, and blue-chip industrial manufacturers and distributors. This buyout supports Dover's expanding portfolio of digital sales and marketing capabilities. This year, the company also bought four attractive bolt-on businesses in single-use pumps, brand protection software and IoT dispensing solutions.

Dover operates through five operating segments — Engineered Products, Fueling Solutions, Imaging & Identification, Pumps & Process Solutions and Refrigeration & Food Equipment. Its Engineered Products segment is expected to gain from solid demand for engineered products, vehicle service and industrial automation. Fueling Solutions is likely to gain traction from robust demand in systems and software, recovering underground demand and vehicle wash. The Imaging & Identification segment can benefit from strong demand for consumables and fast-moving consumer goods solutions. The Pumps & Process Solutions business is likely to benefit from strong demand for biopharma connectors and pumps, aided by vaccine and non-COVID-related pharmaceutical tailwinds. Large backlog and strong order rates in the food retail business are expected to drive the Refrigeration & Food Equipment segment.

Dover is focused on investments in capacity expansions in high-growth businesses and productivity improvements across its portfolio. Dover’s productivity and cost-control initiatives are likely to somewhat offset supply chain constraints and cost inflation of raw material, aiding bottom-line growth.

Price Performance

Dover’s shares have gained 31.5% so far this year, outperforming the industry’s growth of 9.4%.

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Zacks Rank & Other Stocks to Consider

Dover currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other top-ranked stocks in the Industrial Products sector include Encore Wire Corporation WIRE, Deere & Company DE and Lincoln Electric Holdings, Inc. LECO. While Encore Wire sports a Zacks Rank #1, Deere & Lincoln Electric carry a Zacks Rank #2, at present.

Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. So far this year, the company’s shares have gained 45%.

Deere has an estimated earnings growth rate of 117.5% for fiscal 2021. The company’s shares have rallied 36.3%, so far this year.

Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. The stock has appreciated 22%, year to date.

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