Dover on Thursday delivered better-than-expected second-quarter earnings and raised its full-year guidance — an all-around strong report that validates our decision to take a stake in the industrial name two months ago. Revenue in the three months ended June 30 totaled $2.18 billion, topping the consensus of $2.15 billion, according to estimates compiled by LSEG. Sales rose 5% year over year on an organic basis, which removes the impact of foreign exchange, acquisitions, and divestitures. Adjusted earnings per share (EPS) rose 15% annually to $2.36, exceeding the $2.21 estimate, LSEG data showed. Dover Why we own it : We own Dover as an industrial turnaround story with exposure to mega-themes, most notably the data center buildout to support artificial intelligence computing. The company’s key products for data centers are thermal connectors and heat exchangers. Dover’s business serving the biopharma industry is another attractive area. Dover’s active portfolio management and commitment to capital returns sweeten the investment case. Competitors : Ingersoll Rand , IDEX Corp ., Snap-On , Veralto , among others Weight in portfolio : 1.65% Most recent buy : June 18, 2024 Initiated : May 28, 2024 Bottom line One way to ensure your stock’s six-session losing streak will come to an end: Report the kind of quarter Dover did Thursday morning, which sent shares jumping more than 6%, to over $187 each. Its all-time high of $191.49 came on July 16, before that stretch of losses began. “This stock and this company is doing a lot right. I think this goes higher,” Jim Cramer said on Thursday’s Morning Meeting. Dover checked a number of important boxes: (1) beats on the top and bottom lines, (2)improved earnings guidance, and (3) a third consecutive quarter of positive companywide order growth. CEO Richard Tobin also offered upbeat commentary on the businesses that investors currently care about the most — thermal connectors used in data centers, biopharma components, and CO2 systems for refrigeration. “Our inventory positions are well-placed, and some of the markets that we have exposure to that suffered over the past 24 months are making a turn,” Tobin said on the post-earnings conference call. “On top of that, some of the growth platforms we have like thermal connectors and CO2 systems … are performing very nicely.” Encouragingly, Tobin said he expects Dover’s book-to-bill ratio to be above 1 for the rest of the year, a key threshold that indicates more orders are being placed than filled. “It’s been a little bit lumpy intra-quarter, so we’ll see how it goes. But our expectation is to be above 1 for the balance of the year,” Tobin said. Dover’s recent portfolio moves — selling its Environmental Solutions Group unit that makes garbage trucks and trash compactors, while buying two components suppliers in industrial gases, Michigan-based Marshall Excelsior and Dutch firm Demaco — were major point of discussion on the call. Tobin said the moves…
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