Dover CorporationDOVNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $168.71 per share(market-calibrated)

-23.8%

Upside to Fair Value

Current

$221.55

Pure Model

$162.64

Fair Value

$168.71

Bull Case

$194.34

Bear Case

$132.03

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

5.98%

Calibrated Growth

3.18%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $162.64.

What's Driving This Ratingfor DOV

✓

CapEx already efficient

CapEx at 2.40% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

→

Moderate revenue growth

Analyst consensus projects 5.94% revenue growth, fading to 2.25% by Year 10. Revenue reaches $11.0B (vs $8.1B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $133.48/share (14.2x terminal FCF) while exit multiple gives $191.79/share (25.1x terminal FCF). The 18x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.25% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $221.55, the market implies 5.98% perpetual growth — 373bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 71.66% indicates efficient cash generation. FCF reaches $1.8B by Year 10 (16.47% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.29

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.30%

Cost of Debt

Pre-tax Cost of Debt3.15%

Tax Rate20.14%

After-tax Cost of Debt2.51%

Equity Weight (E/V)88.94%

Debt Weight (D/V)11.06%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (88.94% × 10.30%) + (11.06% × 2.51%)

= 9.44%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$8.6B	$9.3B	$9.8B	$10.3B	$11.0B
EBIT	$1.6B	$1.8B	$1.9B	$1.9B	$2.1B
Tax	$327M	$356M	$375M	$392M	$420M
NOPAT	$1.3B	$1.4B	$1.5B	$1.6B	$1.7B
+ Depreciation	$346M	$376M	$397M	$415M	$443M
- Capex	$206M	$224M	$236M	$247M	$264M
- Δ NWC	$64M	$49M	$29M	$30M	$32M
Free Cash Flow	$1.4B	$1.5B	$1.6B	$1.7B	$1.8B
Discount Factor	0.914	0.763	0.637	0.532	0.406
Present Value	$1.3B	$1.2B	$1.0B	$901M	$734M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.8B

Terminal Growth Rate2.25%

WACC9.44%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$25.7B

PV of Terminal Value$10.4B

Exit Multiple Method

Year 10 EBITDA$2.5B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$45.5B

PV of Terminal Value$18.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$10.0B

PV of Terminal Value$10.4B

Enterprise Value$20.4B

(-) Net Debt$2.1B

Equity Value$18.3B

Shares Outstanding137M

Price per Share$133.48

Exit Multiple Method

PV of Projected FCFs$10.0B

PV of Terminal Value$18.4B

Enterprise Value$28.4B

(-) Net Debt$2.1B

Equity Value$26.3B

Shares Outstanding137M

Price per Share$191.79

Pure Model Fair Value

$162.64

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
7.44%	$197.97	$202.88	$208.73	$215.83	$224.63
8.44%	$175.79	$179.10	$182.94	$187.45	$192.84
9.44%	$157.66	$159.99	$162.64	$165.68	$169.22
10.44%	$142.44	$144.13	$146.03	$148.17	$150.61
11.44%	$129.42	$130.68	$132.08	$133.63	$135.38

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$132.03

-40.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.61

Base Case

$162.64

-26.6% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.29

Bull Case

$194.34

-12.3% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 1.10

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth5.94%

Year 3 Revenue Growth4.09%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin18.95%

Tax Rate20.14%

Historical Capex / Rev2.40%

NWC / Revenue13.29%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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