Intrinsic value of Dover Corporation - DOV

Previous Close

$92.53

  Intrinsic Value

$75.01

stock screener

  Rating & Target

hold

-19%

Previous close

$92.53

 
Intrinsic value

$75.01

 
Up/down potential

-19%

 
Rating

hold

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 0001), $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 13.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.20
  3.38
  3.54
  3.69
  3.82
  3.94
  4.04
  4.14
  4.23
  4.30
  4.37
  4.44
  4.49
  4.54
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.80
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
  4.91
  4.92
Revenue, $m
  7,216
  7,460
  7,724
  8,009
  8,315
  8,642
  8,991
  9,363
  9,759
  10,179
  10,624
  11,095
  11,594
  12,120
  12,676
  13,263
  13,882
  14,535
  15,222
  15,946
  16,709
  17,511
  18,356
  19,244
  20,179
  21,161
  22,195
  23,281
  24,424
  25,624
Variable operating expenses, $m
  6,132
  6,323
  6,530
  6,753
  6,993
  7,249
  7,523
  7,814
  8,124
  8,453
  8,321
  8,690
  9,080
  9,492
  9,928
  10,387
  10,872
  11,383
  11,922
  12,489
  13,086
  13,714
  14,376
  15,072
  15,803
  16,573
  17,383
  18,234
  19,128
  20,068
Fixed operating expenses, $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
Total operating expenses, $m
  6,132
  6,323
  6,530
  6,753
  6,993
  7,249
  7,523
  7,814
  8,124
  8,453
  8,321
  8,690
  9,080
  9,492
  9,928
  10,387
  10,872
  11,383
  11,922
  12,489
  13,086
  13,714
  14,376
  15,072
  15,803
  16,573
  17,383
  18,234
  19,128
  20,068
Operating income, $m
  1,083
  1,136
  1,193
  1,255
  1,322
  1,393
  1,468
  1,549
  1,635
  1,726
  2,304
  2,406
  2,514
  2,628
  2,749
  2,876
  3,010
  3,151
  3,300
  3,457
  3,623
  3,797
  3,980
  4,173
  4,375
  4,588
  4,812
  5,048
  5,296
  5,556
EBITDA, $m
  1,731
  1,790
  1,853
  1,921
  1,995
  2,073
  2,157
  2,246
  2,341
  2,442
  2,549
  2,662
  2,781
  2,908
  3,041
  3,182
  3,330
  3,487
  3,652
  3,826
  4,008
  4,201
  4,404
  4,617
  4,841
  5,077
  5,325
  5,585
  5,859
  6,147
Interest expense (income), $m
  131
  171
  180
  191
  202
  215
  228
  242
  257
  273
  290
  308
  328
  348
  370
  392
  416
  442
  468
  497
  526
  558
  591
  625
  662
  700
  741
  783
  828
  875
  924
Earnings before tax, $m
  912
  956
  1,003
  1,053
  1,107
  1,165
  1,226
  1,292
  1,362
  1,435
  1,995
  2,078
  2,166
  2,258
  2,356
  2,459
  2,568
  2,683
  2,804
  2,931
  3,065
  3,206
  3,355
  3,511
  3,675
  3,848
  4,029
  4,220
  4,421
  4,632
Tax expense, $m
  246
  258
  271
  284
  299
  314
  331
  349
  368
  388
  539
  561
  585
  610
  636
  664
  693
  724
  757
  791
  828
  866
  906
  948
  992
  1,039
  1,088
  1,139
  1,194
  1,251
Net income, $m
  666
  698
  732
  769
  808
  850
  895
  943
  994
  1,048
  1,456
  1,517
  1,581
  1,649
  1,720
  1,795
  1,875
  1,959
  2,047
  2,140
  2,238
  2,340
  2,449
  2,563
  2,683
  2,809
  2,941
  3,081
  3,227
  3,381

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  8,631
  8,923
  9,239
  9,580
  9,946
  10,337
  10,755
  11,200
  11,674
  12,176
  12,708
  13,272
  13,868
  14,498
  15,163
  15,865
  16,605
  17,386
  18,208
  19,074
  19,986
  20,946
  21,956
  23,019
  24,137
  25,313
  26,549
  27,849
  29,215
  30,651
Adjusted assets (=assets-cash), $m
  8,631
  8,923
  9,239
  9,580
  9,946
  10,337
  10,755
  11,200
  11,674
  12,176
  12,708
  13,272
  13,868
  14,498
  15,163
  15,865
  16,605
  17,386
  18,208
  19,074
  19,986
  20,946
  21,956
  23,019
  24,137
  25,313
  26,549
  27,849
  29,215
  30,651
Revenue / Adjusted assets
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
  0.836
Average production assets, $m
  3,348
  3,461
  3,584
  3,716
  3,858
  4,010
  4,172
  4,345
  4,528
  4,723
  4,930
  5,148
  5,379
  5,624
  5,882
  6,154
  6,441
  6,744
  7,063
  7,399
  7,753
  8,125
  8,517
  8,929
  9,363
  9,819
  10,298
  10,803
  11,333
  11,890
Working capital, $m
  520
  537
  556
  577
  599
  622
  647
  674
  703
  733
  765
  799
  835
  873
  913
  955
  1,000
  1,046
  1,096
  1,148
  1,203
  1,261
  1,322
  1,386
  1,453
  1,524
  1,598
  1,676
  1,758
  1,845
Total debt, $m
  3,341
  3,536
  3,748
  3,976
  4,221
  4,482
  4,762
  5,060
  5,376
  5,713
  6,069
  6,446
  6,845
  7,266
  7,711
  8,181
  8,676
  9,198
  9,748
  10,328
  10,938
  11,580
  12,256
  12,967
  13,715
  14,501
  15,328
  16,198
  17,112
  18,072
Total liabilities, $m
  5,774
  5,969
  6,181
  6,409
  6,654
  6,916
  7,195
  7,493
  7,810
  8,146
  8,502
  8,879
  9,278
  9,699
  10,144
  10,614
  11,109
  11,631
  12,181
  12,761
  13,371
  14,013
  14,689
  15,400
  16,148
  16,934
  17,761
  18,631
  19,545
  20,505
Total equity, $m
  2,857
  2,954
  3,058
  3,171
  3,292
  3,422
  3,560
  3,707
  3,864
  4,030
  4,206
  4,393
  4,590
  4,799
  5,019
  5,251
  5,496
  5,755
  6,027
  6,314
  6,615
  6,933
  7,268
  7,619
  7,989
  8,379
  8,788
  9,218
  9,670
  10,145
Total liabilities and equity, $m
  8,631
  8,923
  9,239
  9,580
  9,946
  10,338
  10,755
  11,200
  11,674
  12,176
  12,708
  13,272
  13,868
  14,498
  15,163
  15,865
  16,605
  17,386
  18,208
  19,075
  19,986
  20,946
  21,957
  23,019
  24,137
  25,313
  26,549
  27,849
  29,215
  30,650
Debt-to-equity ratio
  1.170
  1.200
  1.230
  1.250
  1.280
  1.310
  1.340
  1.360
  1.390
  1.420
  1.440
  1.470
  1.490
  1.510
  1.540
  1.560
  1.580
  1.600
  1.620
  1.640
  1.650
  1.670
  1.690
  1.700
  1.720
  1.730
  1.740
  1.760
  1.770
  1.780
Adjusted equity ratio
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331
  0.331

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  666
  698
  732
  769
  808
  850
  895
  943
  994
  1,048
  1,456
  1,517
  1,581
  1,649
  1,720
  1,795
  1,875
  1,959
  2,047
  2,140
  2,238
  2,340
  2,449
  2,563
  2,683
  2,809
  2,941
  3,081
  3,227
  3,381
Depreciation, amort., depletion, $m
  648
  653
  660
  666
  673
  681
  689
  697
  706
  716
  245
  256
  268
  280
  293
  306
  320
  336
  351
  368
  386
  404
  424
  444
  466
  489
  512
  537
  564
  592
Funds from operations, $m
  1,314
  1,351
  1,391
  1,435
  1,481
  1,531
  1,584
  1,640
  1,700
  1,764
  1,702
  1,773
  1,849
  1,928
  2,013
  2,102
  2,195
  2,294
  2,398
  2,508
  2,623
  2,745
  2,873
  3,007
  3,149
  3,297
  3,454
  3,618
  3,791
  3,973
Change in working capital, $m
  16
  18
  19
  21
  22
  24
  25
  27
  28
  30
  32
  34
  36
  38
  40
  42
  45
  47
  49
  52
  55
  58
  61
  64
  67
  71
  74
  78
  82
  86
Cash from operations, $m
  1,298
  1,334
  1,372
  1,414
  1,459
  1,507
  1,559
  1,614
  1,672
  1,734
  1,670
  1,739
  1,813
  1,890
  1,973
  2,059
  2,151
  2,247
  2,349
  2,456
  2,568
  2,687
  2,812
  2,943
  3,081
  3,227
  3,379
  3,540
  3,709
  3,886
Maintenance CAPEX, $m
  -161
  -167
  -172
  -178
  -185
  -192
  -199
  -208
  -216
  -225
  -235
  -245
  -256
  -268
  -280
  -293
  -306
  -320
  -336
  -351
  -368
  -386
  -404
  -424
  -444
  -466
  -489
  -512
  -537
  -564
New CAPEX, $m
  -106
  -113
  -123
  -132
  -142
  -152
  -162
  -173
  -184
  -195
  -207
  -219
  -231
  -244
  -258
  -272
  -287
  -303
  -319
  -336
  -354
  -372
  -392
  -412
  -434
  -456
  -480
  -504
  -530
  -557
Cash from investing activities, $m
  -267
  -280
  -295
  -310
  -327
  -344
  -361
  -381
  -400
  -420
  -442
  -464
  -487
  -512
  -538
  -565
  -593
  -623
  -655
  -687
  -722
  -758
  -796
  -836
  -878
  -922
  -969
  -1,016
  -1,067
  -1,121
Free cash flow, $m
  1,031
  1,054
  1,078
  1,104
  1,132
  1,163
  1,197
  1,233
  1,272
  1,314
  1,228
  1,275
  1,325
  1,378
  1,435
  1,494
  1,557
  1,624
  1,694
  1,768
  1,846
  1,929
  2,016
  2,107
  2,203
  2,305
  2,411
  2,523
  2,641
  2,765
Issuance/(repayment) of debt, $m
  177
  195
  211
  228
  245
  262
  280
  298
  317
  336
  356
  377
  399
  421
  445
  470
  495
  522
  550
  579
  610
  642
  676
  711
  748
  787
  827
  869
  914
  961
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  177
  195
  211
  228
  245
  262
  280
  298
  317
  336
  356
  377
  399
  421
  445
  470
  495
  522
  550
  579
  610
  642
  676
  711
  748
  787
  827
  869
  914
  961
Total cash flow (excl. dividends), $m
  1,208
  1,249
  1,289
  1,332
  1,377
  1,425
  1,477
  1,531
  1,589
  1,650
  1,584
  1,652
  1,724
  1,800
  1,880
  1,964
  2,053
  2,146
  2,244
  2,348
  2,457
  2,571
  2,691
  2,818
  2,951
  3,091
  3,238
  3,393
  3,555
  3,726
Retained Cash Flow (-), $m
  -88
  -97
  -105
  -113
  -121
  -130
  -138
  -147
  -157
  -166
  -176
  -187
  -197
  -209
  -220
  -232
  -245
  -258
  -272
  -287
  -302
  -318
  -334
  -352
  -370
  -389
  -409
  -430
  -452
  -475
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
  1,120
  1,152
  1,184
  1,219
  1,256
  1,296
  1,338
  1,384
  1,432
  1,484
  1,408
  1,466
  1,527
  1,591
  1,660
  1,732
  1,808
  1,888
  1,972
  2,061
  2,155
  2,253
  2,357
  2,466
  2,581
  2,702
  2,829
  2,963
  3,103
  3,251
Discount rate, %
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
  1,049
  1,006
  956
  904
  849
  792
  733
  673
  612
  552
  451
  399
  349
  301
  256
  215
  178
  144
  115
  90
  69
  52
  38
  28
  19
  13
  9
  6
  4
  2
Current shareholders' claim on cash, %
  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 is a diversified global manufacturer delivering equipment and components, specialty systems, consumable supplies, software and digital solutions and support services. The Company's segments include Energy, Engineered Systems, Fluids and Refrigeration & Food Equipment. The Company's Energy segment is a provider of solutions and services for production and processing of fuels around the world. Its Engineered Systems segment includes two platforms: Printing & Identification, and Industrials and is focused on the design, manufacture and service of critical equipment and components serving the fast-moving consumer goods, digital textile printing and industrial end markets. Its Fluids segment is focused on the safe handling of critical fluids across the retail fueling, chemical, and industrial end markets. The Refrigeration & Food Equipment segment is a provider of energy efficient equipment and systems serving the commercial refrigeration and food equipment end markets.

FINANCIAL RATIOS  of  Dover Corporation (DOV)

Valuation Ratios
P/E Ratio 28.3
Price to Sales 2.1
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 16.7
Price to Free Cash Flow 20.6
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 $6992 million for the last fiscal year's total revenue generated by Dover Corporation. The default revenue input number comes from 0001 income statement of Dover Corporation. 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 3.2% 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 6.7%, whose default value for DOV is calculated based on our internal credit rating of Dover Corporation, 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 Corporation.
    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 85.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 5.4% for Dover Corporation.

Corporate tax rate of 27% is the nominal tax rate for Dover Corporation. 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 46.4%.

Life of production assets of 20.1 years is the average useful life of capital assets used in Dover Corporation 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 7.2%. 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 - $2768.666 million for Dover Corporation - 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 144.889 million for Dover Corporation 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 Corporation at the current share price and the inputted number of shares is $13.4 billion.

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