Overlooked industrial Dover gets the market’s attention with a strong first quarter
Dover on Thursday reported healthy first-quarter results, highlighted by double-digit earnings growth and a brimming order book. In an AI-obsessed market, the industrial conglomerate is sometimes overlooked by investors. On Thursday, at least, it’s getting a much-deserved day in the sun. Revenue rose 10% year over year to $2.05 billion, topping the LSEG consensus of $2 billion. On an organic basis, which removes the impact of acquisitions and currency exchange fluctuations, total revenue grew 5.3%. Adjusted earnings per share (EPS) in the three months ended in March totaled $2.28, a 2-cent beat versus the LSEG consensus, and up 11.2% from a year earlier. DOV YTD mountain Dover YTD Shares of Dover jumped about 5.5% on Thursday to roughly $229 apiece. Dover entered Thursday up just shy of 11% year to date, essentially in line with the broader industrial sector . The stock’s all-time closing high came on Feb. 20 at $233.31, eight days before the Iran war broke out and muddied the global economic outlook. Bottom line A round of applause for Dover and CEO Richard Tobin. Going into earnings, we said we were on the fence about whether Dover still belonged in the portfolio — not because it’s a poorly run company, or didn’t have anything exciting going on. The debate essentially boiled down to this: Did Dover have enough going right to capture investors’ attention and dollars in a market dominated by the artificial intelligence gold rush? We knew it had some businesses riding the AI wave, specifically around liquid cooling in data centers and spending to update the electric grid. But it also has a bunch of other businesses serving markets like can-making, vehicle repair lifts, and textile printing that, well, aren’t exactly in the market zeitgeist. Against that backdrop, would Dover be able to break through? Were there better opportunities elsewhere, even staying within the industrial sector, that had more AI exposure, a la Club name GE Vernova ? We’re stepping off the fence. Based on these first-quarter results and conference call commentary, Dover deserves to stick around. And plenty of other investors are taking notice, judging by the stock’s well-earned pop Thursday. Why we own it We own Dover for its exposure to mega-themes, including 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 active portfolio management and commitment to capital returns sweeten the investment case. Competitors : Ingersoll Rand , IDEX Corp ., Snap-On , Veralto , among others Most recent buy: July 30, 2025 Initiated : May 28, 2024 The most important number in Dover’s release: orders rose 24% year over year to $2.5 billion. That’s across the whole company — an incredibly impressive feat. Plus, Dover’s companywide book-to-bill ratio was a robust 1.2. This measures the number of orders received in a period versus the number of orders fulfilled, so you want the number to be above 1 to signal more business is coming in than going out. Investors in the industrials sector pay very close attention to these metrics. They cannot help but like what they see Thursday. The first question that Tobin faced from Wall Street analysts on the earnings call: Were the orders so strong because customers were trying to get ahead of potentially Middle East-related supply chain disruptions? Nope, according to Tobin. “We don’t see any kind of pre-buy,” said Tobin, who’s been chief executive since 2018. “What you do see is customers ordering for later delivery periods than normal, just because demand is outstripping supply, at the end of the day.” That dynamic is especially pronounced in Dover’s business selling brazed plate heat exchangers, which are used in liquid-cooling systems in data centers, and seeing a surge in demand thanks to AI. It’s also boosting Dover’s CO2 refrigeration business, which isn’t an AI story but still has some favorable tailwinds behind it. Grocery store operators want the energy efficiency gains of CO2 systems — and Tobin calls this a multi-year growth opportunity, especially in the U.S., where Dover is the market leader and only 10% of the installed base has transitioned away from synthetic refrigerants. Dover’s refrigeration business was a drag on growth last year, which the company chalked up to the ripple effects of President Donald Trump ‘s tariff shocks. It has the wind at its back now. Finally, a brief point on M & A: Tobin said Dover is poking around for opportunities, but he isn’t willing to pull the trigger on anything unless the price is right — and at the moment, he thinks valuations are a bit stretched for potential takeover targets. As much as we’d like to see Dover put some of its dry powder to work to boost growth, we also appreciate that Tobin is being responsible and not making deals for the sake of making deals. We’re raising our price target on Dover to $245 a share from $230, but keeping our hold-equivalent 2 rating on the stock. Quarterly commentary The changing fortunes of the refrigeration business — housed within its Climate & Sustainability Technologies segment — are indicative of what makes the Dover story easier to get behind now. Whenever you’re dealing with an industrial company as diversified as Dover, some businesses will be doing better than others. It’s just the reality of operating in a bunch of different markets and helps explain why the stocks of conglomerates can be valued at a discount to simpler, more streamlined firms. Right now at Dover, though, all five of Dover’s operating segments are seeing healthy order growth, which wasn’t the case throughout last year. Of course, some are stronger than others. Climate & Sustainability Technologies was up a blistering 64% in Q1, thanks to the data center and refrigeration spending, and the company raised its full-year expectations to double-digit organic growth from high-single digits previously. The Pumps & Process Solutions segment saw 20% order growth. This unit houses some data center exposure — namely, thermal connectors also used in liquid cooling — and other AI-related exposure with its subsidiary that makes bearings for gas turbines and the recently acquired Sikora, which makes inspection equipment for high-voltage wires and cables. With growing investments in the electrical grid, Sikora benefits. Across the whole company, Tobin on Thursday said Dover expects over $1 billion in revenue in 2026 from applications tied to AI and power generation infrastructure — in other words, the buzzy trends driving so much of the market. The Street currently projects about $8.6 billion in full-year revenue for Dover. So, that $1 billion AI business guide would be just over 11.5% of total revenue . Dover’s Clean Energy & Fueling segment saw 13% order growth in the quarter, driven in large part by retail fueling (yes, it sells gas pumps ) as national retailers embark on what Tobin called “aggressive” build-outs. Think new Costco gas stations. There are also plenty of popular convenience chains like Casey’s and Texas-based Buc-ee’s that are opening up locations in new states. Tobin said retail fueling is still in the “early innings of a multi-year growth cycle.” Not AI, but not nothing. The final segment with double-digit orders was Engineered Products , up 11% and benefiting from tailwinds in aerospace and defense. Even the vehicle lift business, which had been struggling, showed improvements. The weakest segment was Imaging & Identification , which is home to the textile printing business. Orders were up 8% in I & I. Tobin described its performance as stable, and said while it may not ever be a fast-growing segment, it has “very health margins and a ton of cash.” Guidance Dover left its full-year guidance mostly unchanged, though Tobin was clear on the earnings call that he’s being very conservative because it’s still early in the year. That’s nothing new for Tobin. It was roughly a year ago when Tobin cut Dover’s outlook , not based on what he was seeing with customers, but as a “hedge” in case tariffs slowed the economy down. On Thursday, Tobin said if order booking trends remain consistent through the second quarter, they will revisit top-line expectations. For now, here’s where Dover’s outlook stands on the top and bottom lines: Revenue growth: up 5% to 7% on a reported basis and 3% to 5% on an organic basis Adjusted EPS: in the range of $10.45 to $10.65 Dover did slightly lower its EPS outlook on a generally accepted accounting principles (GAAP) basis — $8.92 to $9.12, down from $8.95 to $9.15 previously — but that isn’t a concern because the adjusted outlook was untouched. (Jim Cramer’s Charitable Trust is long DOV. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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