Intrinsic value of Dover - DOV

Previous Close

$85.36

  Intrinsic Value

$176.49

stock screener

  Rating & Target

str. buy

+107%

  Value-price divergence*

-26%

Previous close

$85.36

 
Intrinsic value

$176.49

 
Up/down potential

+107%

 
Rating

str. buy

 
Value-price divergence*

-26%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DOV stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 13.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -2.33
  11.80
  11.12
  10.51
  9.96
  9.46
  9.02
  8.61
  8.25
  7.93
  7.63
  7.37
  7.13
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
  5.36
  5.32
Revenue, $m
  6,794
  7,596
  8,440
  9,327
  10,256
  11,226
  12,238
  13,293
  14,390
  15,530
  16,716
  17,948
  19,228
  20,559
  21,942
  23,381
  24,877
  26,435
  28,056
  29,745
  31,506
  33,342
  35,257
  37,256
  39,343
  41,524
  43,802
  46,185
  48,677
  51,284
  54,012
Variable operating expenses, $m
 
  2,240
  2,438
  2,647
  2,865
  3,093
  3,330
  3,578
  3,836
  4,103
  4,382
  4,215
  4,516
  4,828
  5,153
  5,491
  5,842
  6,208
  6,589
  6,985
  7,399
  7,830
  8,280
  8,749
  9,239
  9,751
  10,286
  10,846
  11,431
  12,043
  12,684
Fixed operating expenses, $m
 
  4,127
  4,230
  4,336
  4,444
  4,555
  4,669
  4,786
  4,905
  5,028
  5,154
  5,282
  5,415
  5,550
  5,689
  5,831
  5,977
  6,126
  6,279
  6,436
  6,597
  6,762
  6,931
  7,104
  7,282
  7,464
  7,651
  7,842
  8,038
  8,239
  8,445
Total operating expenses, $m
  5,983
  6,367
  6,668
  6,983
  7,309
  7,648
  7,999
  8,364
  8,741
  9,131
  9,536
  9,497
  9,931
  10,378
  10,842
  11,322
  11,819
  12,334
  12,868
  13,421
  13,996
  14,592
  15,211
  15,853
  16,521
  17,215
  17,937
  18,688
  19,469
  20,282
  21,129
Operating income, $m
  811
  1,229
  1,772
  2,345
  2,947
  3,579
  4,239
  4,929
  5,649
  6,399
  7,180
  8,451
  9,298
  10,181
  11,101
  12,059
  13,059
  14,101
  15,188
  16,324
  17,510
  18,750
  20,046
  21,402
  22,822
  24,308
  25,865
  27,497
  29,208
  31,002
  32,883
EBITDA, $m
  1,172
  1,838
  2,398
  2,988
  3,609
  4,260
  4,941
  5,652
  6,394
  7,167
  7,972
  8,811
  9,684
  10,594
  11,541
  12,528
  13,557
  14,631
  15,751
  16,920
  18,142
  19,418
  20,753
  22,149
  23,611
  25,141
  26,744
  28,423
  30,184
  32,030
  33,967
Interest expense (income), $m
  131
  134
  163
  193
  225
  259
  294
  330
  368
  407
  448
  491
  536
  582
  629
  679
  731
  785
  841
  899
  960
  1,023
  1,090
  1,158
  1,230
  1,306
  1,384
  1,466
  1,552
  1,642
  1,735
Earnings before tax, $m
  689
  1,095
  1,609
  2,152
  2,722
  3,320
  3,946
  4,599
  5,281
  5,992
  6,732
  7,960
  8,763
  9,600
  10,471
  11,380
  12,328
  13,316
  14,347
  15,425
  16,550
  17,726
  18,957
  20,244
  21,591
  23,003
  24,481
  26,031
  27,656
  29,360
  31,148
Tax expense, $m
  180
  296
  434
  581
  735
  896
  1,065
  1,242
  1,426
  1,618
  1,818
  2,149
  2,366
  2,592
  2,827
  3,073
  3,328
  3,595
  3,874
  4,165
  4,468
  4,786
  5,118
  5,466
  5,830
  6,211
  6,610
  7,028
  7,467
  7,927
  8,410
Net income, $m
  509
  799
  1,175
  1,571
  1,987
  2,424
  2,880
  3,357
  3,855
  4,374
  4,914
  5,810
  6,397
  7,008
  7,644
  8,307
  8,999
  9,721
  10,474
  11,260
  12,081
  12,940
  13,838
  14,778
  15,762
  16,792
  17,871
  19,003
  20,189
  21,433
  22,738

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  350
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  10,116
  10,913
  12,127
  13,401
  14,736
  16,130
  17,584
  19,099
  20,675
  22,314
  24,017
  25,787
  27,627
  29,539
  31,527
  33,593
  35,743
  37,981
  40,311
  42,738
  45,267
  47,905
  50,656
  53,528
  56,527
  59,660
  62,935
  66,358
  69,938
  73,684
  77,604
Adjusted assets (=assets-cash), $m
  9,766
  10,913
  12,127
  13,401
  14,736
  16,130
  17,584
  19,099
  20,675
  22,314
  24,017
  25,787
  27,627
  29,539
  31,527
  33,593
  35,743
  37,981
  40,311
  42,738
  45,267
  47,905
  50,656
  53,528
  56,527
  59,660
  62,935
  66,358
  69,938
  73,684
  77,604
Revenue / Adjusted assets
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
  0.696
Average production assets, $m
  2,508
  2,803
  3,114
  3,442
  3,784
  4,143
  4,516
  4,905
  5,310
  5,731
  6,168
  6,623
  7,095
  7,586
  8,097
  8,628
  9,180
  9,754
  10,353
  10,976
  11,626
  12,303
  13,010
  13,747
  14,518
  15,322
  16,163
  17,042
  17,962
  18,924
  19,931
Working capital, $m
  649
  798
  886
  979
  1,077
  1,179
  1,285
  1,396
  1,511
  1,631
  1,755
  1,885
  2,019
  2,159
  2,304
  2,455
  2,612
  2,776
  2,946
  3,123
  3,308
  3,501
  3,702
  3,912
  4,131
  4,360
  4,599
  4,849
  5,111
  5,385
  5,671
Total debt, $m
  3,621
  3,973
  4,715
  5,493
  6,308
  7,160
  8,049
  8,974
  9,937
  10,939
  11,979
  13,061
  14,185
  15,353
  16,568
  17,831
  19,144
  20,511
  21,935
  23,418
  24,963
  26,575
  28,256
  30,011
  31,843
  33,757
  35,758
  37,850
  40,037
  42,326
  44,721
Total liabilities, $m
  6,316
  6,668
  7,410
  8,188
  9,003
  9,855
  10,744
  11,669
  12,632
  13,634
  14,674
  15,756
  16,880
  18,048
  19,263
  20,526
  21,839
  23,206
  24,630
  26,113
  27,658
  29,270
  30,951
  32,706
  34,538
  36,452
  38,453
  40,545
  42,732
  45,021
  47,416
Total equity, $m
  3,800
  4,245
  4,717
  5,213
  5,732
  6,274
  6,840
  7,429
  8,042
  8,680
  9,343
  10,031
  10,747
  11,491
  12,264
  13,068
  13,904
  14,775
  15,681
  16,625
  17,609
  18,635
  19,705
  20,823
  21,989
  23,208
  24,482
  25,813
  27,206
  28,663
  30,188
Total liabilities and equity, $m
  10,116
  10,913
  12,127
  13,401
  14,735
  16,129
  17,584
  19,098
  20,674
  22,314
  24,017
  25,787
  27,627
  29,539
  31,527
  33,594
  35,743
  37,981
  40,311
  42,738
  45,267
  47,905
  50,656
  53,529
  56,527
  59,660
  62,935
  66,358
  69,938
  73,684
  77,604
Debt-to-equity ratio
  0.953
  0.940
  1.000
  1.050
  1.100
  1.140
  1.180
  1.210
  1.240
  1.260
  1.280
  1.300
  1.320
  1.340
  1.350
  1.360
  1.380
  1.390
  1.400
  1.410
  1.420
  1.430
  1.430
  1.440
  1.450
  1.450
  1.460
  1.470
  1.470
  1.480
  1.480
Adjusted equity ratio
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389
  0.389

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  509
  799
  1,175
  1,571
  1,987
  2,424
  2,880
  3,357
  3,855
  4,374
  4,914
  5,810
  6,397
  7,008
  7,644
  8,307
  8,999
  9,721
  10,474
  11,260
  12,081
  12,940
  13,838
  14,778
  15,762
  16,792
  17,871
  19,003
  20,189
  21,433
  22,738
Depreciation, amort., depletion, $m
  361
  609
  626
  643
  662
  681
  702
  723
  745
  768
  792
  360
  386
  412
  440
  469
  499
  530
  563
  597
  632
  669
  707
  747
  789
  833
  878
  926
  976
  1,028
  1,083
Funds from operations, $m
  1,033
  1,408
  1,800
  2,214
  2,649
  3,105
  3,582
  4,080
  4,600
  5,142
  5,706
  6,170
  6,783
  7,420
  8,084
  8,776
  9,498
  10,251
  11,036
  11,856
  12,713
  13,609
  14,545
  15,525
  16,551
  17,625
  18,750
  19,929
  21,165
  22,461
  23,821
Change in working capital, $m
  171
  84
  89
  93
  98
  102
  106
  111
  115
  120
  124
  129
  134
  140
  145
  151
  157
  164
  170
  177
  185
  193
  201
  210
  219
  229
  239
  250
  262
  274
  286
Cash from operations, $m
  862
  1,324
  1,712
  2,121
  2,552
  3,003
  3,476
  3,970
  4,485
  5,022
  5,581
  6,041
  6,648
  7,280
  7,939
  8,625
  9,341
  10,087
  10,866
  11,679
  12,528
  13,416
  14,344
  15,315
  16,332
  17,396
  18,511
  19,679
  20,903
  22,188
  23,535
Maintenance CAPEX, $m
  0
  -136
  -152
  -169
  -187
  -206
  -225
  -245
  -267
  -289
  -311
  -335
  -360
  -386
  -412
  -440
  -469
  -499
  -530
  -563
  -597
  -632
  -669
  -707
  -747
  -789
  -833
  -878
  -926
  -976
  -1,028
New CAPEX, $m
  -165
  -295
  -312
  -327
  -343
  -358
  -373
  -389
  -405
  -421
  -438
  -455
  -472
  -491
  -510
  -531
  -552
  -575
  -598
  -623
  -650
  -677
  -707
  -738
  -770
  -805
  -841
  -879
  -920
  -962
  -1,007
Cash from investing activities, $m
  -1,504
  -431
  -464
  -496
  -530
  -564
  -598
  -634
  -672
  -710
  -749
  -790
  -832
  -877
  -922
  -971
  -1,021
  -1,074
  -1,128
  -1,186
  -1,247
  -1,309
  -1,376
  -1,445
  -1,517
  -1,594
  -1,674
  -1,757
  -1,846
  -1,938
  -2,035
Free cash flow, $m
  -642
  893
  1,248
  1,624
  2,022
  2,439
  2,877
  3,335
  3,813
  4,312
  4,832
  5,251
  5,816
  6,404
  7,016
  7,654
  8,320
  9,014
  9,738
  10,493
  11,282
  12,107
  12,969
  13,871
  14,814
  15,802
  16,837
  17,921
  19,058
  20,249
  21,500
Issuance/(repayment) of debt, $m
  909
  702
  741
  779
  815
  852
  888
  925
  963
  1,001
  1,041
  1,082
  1,124
  1,168
  1,214
  1,263
  1,314
  1,367
  1,423
  1,483
  1,545
  1,612
  1,681
  1,755
  1,832
  1,914
  2,001
  2,092
  2,188
  2,289
  2,395
Issuance/(repurchase) of shares, $m
  8
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  902
  702
  741
  779
  815
  852
  888
  925
  963
  1,001
  1,041
  1,082
  1,124
  1,168
  1,214
  1,263
  1,314
  1,367
  1,423
  1,483
  1,545
  1,612
  1,681
  1,755
  1,832
  1,914
  2,001
  2,092
  2,188
  2,289
  2,395
Total cash flow (excl. dividends), $m
  255
  1,595
  1,989
  2,403
  2,837
  3,291
  3,766
  4,261
  4,776
  5,314
  5,873
  6,333
  6,940
  7,572
  8,231
  8,917
  9,633
  10,381
  11,161
  11,976
  12,828
  13,718
  14,650
  15,625
  16,647
  17,716
  18,837
  20,013
  21,245
  22,538
  23,895
Retained Cash Flow (-), $m
  -155
  -445
  -472
  -496
  -519
  -542
  -566
  -589
  -613
  -638
  -663
  -689
  -716
  -744
  -773
  -804
  -836
  -870
  -906
  -944
  -984
  -1,026
  -1,070
  -1,117
  -1,167
  -1,219
  -1,274
  -1,332
  -1,393
  -1,457
  -1,525
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,149
  1,517
  1,907
  2,318
  2,749
  3,200
  3,671
  4,163
  4,676
  5,211
  5,644
  6,224
  6,828
  7,457
  8,113
  8,797
  9,510
  10,255
  11,032
  11,844
  12,692
  13,580
  14,508
  15,480
  16,498
  17,564
  18,681
  19,853
  21,081
  22,370
Discount rate, %
 
  7.40
  7.77
  8.16
  8.57
  8.99
  9.44
  9.92
  10.41
  10.93
  11.48
  12.05
  12.66
  13.29
  13.95
  14.65
  15.38
  16.15
  16.96
  17.81
  18.70
  19.63
  20.62
  21.65
  22.73
  23.87
  25.06
  26.31
  27.63
  29.01
  30.46
PV of cash for distribution, $m
 
  1,070
  1,306
  1,507
  1,669
  1,787
  1,862
  1,894
  1,885
  1,838
  1,758
  1,614
  1,489
  1,348
  1,198
  1,044
  891
  746
  611
  490
  384
  294
  220
  160
  114
  78
  52
  34
  21
  13
  8
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Dover Corporation manufactures and sells a range of equipment and components, specialty systems, software and digital solutions, and support services worldwide. The company operates in four segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. The Energy segment provides solutions and services for the production and processing of fuels to drilling and production, bearings and compression, and automation end markets. The Engineered Systems segment offers precision marking and coding, digital textile printing, soldering and dispensing equipment, and related consumables and services; and automation components, including manual clamps, power clamps, rotary and linear mechanical indexers, conveyors, pick and place units, glove ports, and manipulators, as well as end-of-arm robotic grippers, slides, and end effectors for fast-moving consumer goods, digital textile printing, vehicle service, environmental solutions, and industrials end markets. The Fluids segment focuses on the safe handling of critical fluids across the retail fueling, chemical, hygienic, oil and gas, and industrial markets. This segment also manufactures connectors for use in various bio-processing applications; and pumps and compressors that are used to transfer liquid and bulk products in various markets, including refined fuels, LPG, food/sanitary, transportation, and chemical process industries. The Refrigeration & Food Equipment segment manufactures refrigeration systems, refrigeration display cases, specialty glass, commercial glass refrigerator and freezer doors, and brazed heat exchangers; and electrical distribution products and engineering services, commercial food service equipment, cook-chill production systems, custom food storage and preparation products, kitchen ventilation systems, conveyer systems, and beverage can-making machinery. The company was founded in 1947 and is headquartered in Downers Grove, Illinois.

FINANCIAL RATIOS  of  Dover (DOV)

Valuation Ratios
P/E Ratio 26.1
Price to Sales 2
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 15.4
Price to Free Cash Flow 19
Growth Rates
Sales Growth Rate -2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.1%
Cap. Spend. - 3 Yr. Gr. Rate 3%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 84.4%
Total Debt to Equity 95.3%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. 8.7%
Return On Total Capital 7.4%
Ret/ On T. Cap. - 3 Yr. Avg. 10.3%
Return On Equity 13.7%
Return On Equity - 3 Yr. Avg. 18.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 36.6%
Gross Margin - 3 Yr. Avg. 37.5%
EBITDA Margin 17.4%
EBITDA Margin - 3 Yr. Avg. 18.4%
Operating Margin 11.9%
Oper. Margin - 3 Yr. Avg. 13.6%
Pre-Tax Margin 10.1%
Pre-Tax Margin - 3 Yr. Avg. 11.9%
Net Profit Margin 7.5%
Net Profit Margin - 3 Yr. Avg. 10%
Effective Tax Rate 26.1%
Eff/ Tax Rate - 3 Yr. Avg. 26.9%
Payout Ratio 52.7%

DOV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DOV stock intrinsic value calculation we used $6794 million for the last fiscal year's total revenue generated by Dover. The default revenue input number comes from 2016 income statement of Dover. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DOV stock valuation model: a) initial revenue growth rate of 11.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.4%, whose default value for DOV is calculated based on our internal credit rating of Dover, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Dover.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DOV stock the variable cost ratio is equal to 30.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4026 million in the base year in the intrinsic value calculation for DOV stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.1% for Dover.

Corporate tax rate of 27% is the nominal tax rate for Dover. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DOV stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DOV are equal to 36.9%.

Life of production assets of 18.4 years is the average useful life of capital assets used in Dover operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DOV is equal to 10.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3800 million for Dover - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 155.219 million for Dover is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Dover at the current share price and the inputted number of shares is $13.2 billion.

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COMPANY NEWS

▶ 3 Top Dividend Aristocrats To Own Forever   [Aug-05-17 08:03AM  Motley Fool]
▶ ETFs with exposure to Dover Corp. : August 4, 2017   [Aug-04-17 07:31PM  Capital Cube]
▶ [$$] Dover Explores Strategic Alternatives for Most of Its Energy Business   [Aug-03-17 04:49PM  The Wall Street Journal]
▶ Dover beats Street 2Q forecasts   [Jul-21-17 12:30AM  Associated Press]
▶ So Two Breakup Candidates Walk Into Earnings Day...   [Jul-20-17 12:31PM  Bloomberg]
▶ Should You Buy Dover (DOV) Ahead of Earnings?   [Jul-19-17 08:49AM  Zacks]
▶ 3 History-Making Stocks   [Jul-14-17 03:30PM  Motley Fool]
▶ Better Dividend Aristocrat: 3M or Dover?   [Jul-12-17 01:47PM  GuruFocus.com]
▶ Today's top gainers   [Jul-06-17 05:02PM  CNBC Videos]
▶ Dover Corp. Value Analysis (NYSE:DOV) : July 5, 2017   [Jul-05-17 01:27PM  Capital Cube]
▶ iQ100 up over twenty four percent   [Jun-30-17 05:06PM  CNBC Videos]
▶ 3 Top Industrial Machinery Stocks to Buy in 2017   [May-13-17 11:40AM  Motley Fool]
▶ ETFs with exposure to Dover Corp. : April 24, 2017   [Apr-24-17 02:26PM  Capital Cube]
▶ Bluebirds Are Sighted Over Dover   [Apr-20-17 01:49PM  Bloomberg]
▶ Dover beats Street 1Q forecasts   [06:56AM  Associated Press]
▶ ETFs with exposure to Dover Corp. : April 7, 2017   [Apr-07-17 04:22PM  Capital Cube]
▶ Dover Corporation: Dover Acquires Caldera Graphics   [Apr-05-17 04:04PM  GlobeNewswire]
▶ [$$] This Stock Is Levered to an Energy Spending Rebound   [Apr-03-17 03:04PM  Barrons.com]
▶ ETFs with exposure to Dover Corp. : March 27, 2017   [Mar-27-17 03:54PM  Capital Cube]
▶ [$$] Kinderhook Buys Stake in Unit of Dover Corp. for $150 Million   [Feb-15-17 12:25PM  at The Wall Street Journal]
Stock chart of DOV Financial statements of DOV
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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