Dover shares fell Thursday regardless of reporting better-than-expected second quarter outcomes and elevating its full-year outlook. We predict the market is misjudging this one. Income within the second quarter elevated 5% yr over yr to $2.05 billion, beating the $2.04 billion consensus, in accordance with estimates compiled by LSEG. Adjusted earnings per share (EPS) within the three months ended June 30 totaled $2.44, outpacing expectations of $2.39 per share, LSEG information confirmed. DOV YTD bar Dover’s year-to-date inventory efficiency. Backside line We’re shocked by this response to Dover’s earnings. Not solely did the corporate beat on the highest and backside line, it reported a file adjusted section EBITDA margin; an acceleration in bookings that gives visibility into the longer term; and outlined a number of progress and productiveness investments to assist long run progress. What’s to not like? (EDITDA, a measure of working profitability, is brief for earnings earlier than curiosity, taxes, depreciation and amortization.) Dover Why we personal it : We personal Dover as an industrial turnaround story with publicity to mega-themes, most notably the info heart buildout to assist synthetic intelligence computing. The corporate’s key merchandise for information facilities are thermal connectors and warmth exchangers. Dover’s enterprise serving the biopharma trade is one other engaging space. Dover’s energetic portfolio administration and dedication to capital returns sweeten the funding case. Opponents : Ingersoll Rand , IDEX Corp ., Snap-On , Veralto , amongst others Most up-to-date purchase: July 14, 2025 Initiated : Could 28, 2024 Positive, Dover might not be rising income as quick as different industrials like an Eaton or GE Vernova. These fellow Membership shares are extra thematic performs, levered to the proliferation of knowledge facilities world wide. Nonetheless, Dover is not getting sufficient credit score for the way it has reshaped its portfolio. We acknowledge all these portfolio actions — the promoting of slower-growing, decrease margin companies and high-grading with accretive offers — creates some shifting elements. This makes the story complicated and requires endurance. Nevertheless, by these portfolio actions and leaning into fast-growing companies, income progress ought to speed up within the second half of the yr at a better margin charge than in years previous. We predict Thursday’s sell-off ought to be purchased. We’re reiterating our buy-equivalent 1 ranking and preserving our value goal at $210. Quarterly commentary Complete income elevated 5% yr over yr, pushed by a 1% improve in natural gross sales, a 3% profit from acquisitions, and a 1% tailwind from international trade. Bookings are the very best predictor of future progress. It is outlined as whole orders obtained from clients within the reported interval. That is why we have been happy to see bookings improve 7% yr over yr and up sequentially, indicating there’s good momentum within the enterprise. Though Dover is only some weeks into the third quarter, administration mentioned on the earnings name that orders are “monitoring very well,” one other good signal. As well as, Dover’s year-to-date e book to invoice ratio is above 1 throughout all 5 segments, with the corporate mentioning energy in its highest margin and secular progress markets. This could arrange the corporate nicely into the second half of this yr. Ebook-to-bill measures the quantity of orders obtained versus orders fulfilled over a given interval, so above 1 is desired. Dover’s secular progress enterprise platforms are clear vitality parts, precision parts, single-use biopharma, inputs into liquid cooling functions of knowledge heart, and CO2 refrigeration programs. These markets signify 20% of Dover’s portfolio, are larger margin, and are anticipated to develop at a double digit clip. What actually shined on this quarter was Dover’s margins. On an adjusted EBITDA foundation, all 5 segments improved margins over the identical quarter final yr. Now, this is a take a look at how every enterprise section did within the quarter (a foundation level is the same as 0.01 proportion level): Dover’s engineered merchandise section— a various assortment of companies serving finish markets equivalent to car restore, aerospace and protection, and industrial automation — noticed a 5% decline in natural gross sales however a 140 foundation level enchancment to adjusted EBITDA margins. Income fell on account of decrease quantity in car companies, however that was partially offset by progress in aerospace and protection. Regardless of the decrease income, margins improve yr over yr due to price actions, execution and improved mixture of product gross sales. Clear vitality and fueling section — consisting of merchandise utilized in transporting and dishing out varied fuels together with gasoline and compressed pure fuel, amongst others — delivered 8% natural income progress on an annual foundation and margins expanded 80 foundation factors. The natural income progress was pushed by sturdy shipments in clear vitality parts, fluid transport, and North America retail fueling. Margins improved due to a good mixture of product gross sales, productiveness and restructuring actions. Imaging and identification — the place we discover precision marking and coding, product traceability, model safety and digital textile printing tools, together with associated consumables, software program and companies — noticed flat natural income and a 30 foundation level enchancment in margins. The upper gross sales have been pushed by progress in core marking and coding, whereas textile shipments fell. The margin positive factors have been pushed by productiveness and ongoing structural price controls. Pumps and course of options — residence to Dover’s biopharma parts enterprise and its thermal connectors used to liquid cool AI servers — recorded natural income progress of 4%. The income improve was pushed by sturdy shipments and order charges of these biopharma parts and thermal connectors, however precision parts and industrial pumps have been additionally constructive. Polymer processing shipments declined, weighing on income. Because of the quantity energy in excessive margin enterprise traces like biopharma and thermal connectors, margins elevated 180 foundation factors. Local weather and sustainability applied sciences — which gives energy-efficient tools, parts and elements for the business refrigeration, heating and cooling and canmaking tools end-markets — noticed natural income decline 6% however margins enhance 60 foundation factors. Dragging the section decrease have been quantity declines in meals retail door circumstances and companies, however CO2 programs, beverage canmaking, and international warmth exchanges have been a brilliant spot. Margins elevated due to productiveness actions and better mixture of U.S. CO2 programs. Dover’s clear steadiness sheet and enormous money pile gives it with loads of alternatives to take a position inorganically by merger and acquisitions to drive progress and enhance the make-up of the corporate. And it is doing loads of that, with one spotlight within the quarter being the acquisition of Sikora, which is a high-single-digit rising, 30% margin enterprise that gives options for measurement, inspection, and management applied sciences for issues like wires and cables, in addition to plastics functions. However administration additionally believes there are important natural investments to make. For instance, the ninth slide of firm’s earnings presentation highlights how Dover is accelerating progress and productiveness investments throughout its 5 segments to drive long run progress. A few of these are progress capability expansions to assist its fasting rising companies. However the firm can be making investments in productiveness and automation to enhance margins, in addition to optimizing its provide chain and reshoring, prone to scale back the impression of tariffs. Administration plans to take extra about the price financial savings from these actions with its third quarter earnings. Steerage Dover raised its full-year outlook on each income progress and adjusted earnings per share. It now expects income to extend between 4% to six%, an enchancment from its prior expectation of two% to 4% progress. On earnings, the corporate now sees adjusted earnings per share within the vary of $9.35 to $9.55, representing about 14% progress yr over yr on the midpoint. That is a strong improve from the vary of $9.20 to $9.40 that it offered final quarter and a five-cent-per-share enchancment from the $9.30 to $9.50 outlook it offered initially of the yr. Recall, Dover proactively lowered its full-year forecast by 10 cents final quarter not due to “information” or from one thing they have been listening to from clients. It was hedge towards weak financial sentiment on account of tariffs. (Jim Cramer’s Charitable Belief is lengthy DOV. See right here for a full record of the shares.) As a subscriber to the CNBC Investing Membership with Jim Cramer, you’ll obtain a commerce alert earlier than Jim makes a commerce. Jim waits 45 minutes after sending a commerce alert earlier than shopping for or promoting a inventory in his charitable belief’s portfolio. If Jim has talked a couple of inventory on CNBC TV, he waits 72 hours after issuing the commerce alert earlier than executing the commerce. 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