Last update on 2024-06-06

Dover (DOV) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Analyze Dover (DOV) Piotroski F-Score for 2023. Get insights on profitability, liquidity, leverage, and asset turnover with a final score of 7/9.

Short Analysis - Piotroski Score: 7

We're running Dover (DOV) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score evaluates a company's financial strength based on nine criteria related to profitability, liquidity, and operating efficiency. Dover (DOV) has a high F-Score of 7, indicating it is financially strong. The company has positive net income, positive cash flow from operations, and its operating cash flow is greater than its net income. Dover's leverage is decreasing, its current ratio is improving, and it has fewer outstanding shares. Additionally, Dover's gross margin has increased. However, the company's return on assets and asset turnover ratio have declined slightly.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 7, Dover (DOV) appears to be a financially strong and potentially attractive investment. Although there are minor concerns about its declining return on assets and asset turnover ratio, the overall financial health is robust, emphasizing good profitability, liquidity, and operating efficiency. It's worth considering Dover (DOV) for investment, but prospective investors should monitor its asset efficiency closely.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Dover (DOV)

Company has a positive net income?

Net income measures the profitability of a company over a specified period and its ability to generate earnings above expenses. It provides critical insight into the company's financial performance, reflecting its growth and stability.

For Dover (DOV), the net income in 2023 is $1,056,828,000, which is distinctly positive. This reflects a consistent ability to generate profit, cementing confidence in the firm's financial health. Over the last 20 years, DOV has exhibited a generally positive net income trajectory, peaking at $1,123,818,000 in 2021. Although there are fluctuations, with dips notably in 2009 (post-crisis) and 2016, the overall positive figures reinforce a sustained profitable journey. Hence, for this criterion, Dover scores 1 point.

Company has a positive cash flow?

The Cash Flow from Operations (CFO) criterion evaluates whether the company is generating positive cash flow from its core business operations. This is crucial as it indicates the firm's ability to generate sufficient cash to maintain and grow operations.

For Dover (DOV), the CFO in 2023 was $1,336,345,000. This is indeed positive and suggests that Dover's core operations are generating strong cash flow, which is a good sign for its financial health. Over the past 20 years, the company has consistently maintained a positive CFO, with only a few fluctuations. Despite the dip in 2022 to $805,724,000, the significant increase in 2023 is a strong positive indicator, adding 1 point over the period and showing robust operational performance and resilience.

Return on Assets (ROA) are growing?

The change in Return on Assets (ROA) analyses the efficiency of the company in generating profits from its assets year-over-year.

For Dover (DOV), the ROA decreased from 0.1 in 2022 to 0.095 in 2023. This slight decline is concerning as it suggests that Dover was marginally less efficient at converting its assets into profits compared to the previous year. Hence, one cannot add a point according to the Piotroski criteria. Assessing this change in the context of the industry median ROA, which exceeds 0.3 consistently, it indicates that Dover is performing well below the industry standard.

Operating Cashflow are higher than Netincome?

The criterion checks if a company's operating cash flow exceeds its net income. This metric is crucial as it indicates whether a company is generating sufficient cash from its core activities to sustain operations. Healthy cash flow relative to net income is a positive sign of financial health.

For 2023, Dover (DOV) has an operating cash flow of $1,336,345,000 compared to a net income of $1,056,828,000. This results in the operating cash flow being higher than the net income, thus adding 1 point in the Piotroski score. This trend suggests robust cash generation from Dover's core activities, reflecting high-quality earnings as they are supported by solid cash flow. Over the past 20 years, Dover's cash flow from operations has shown a general upward trend, increasing from $593,666,000 in 2003 to $1,336,345,000 in 2023. In comparison, the net income also increased but with more fluctuations, peaking at $1,123,818,000 in 2021 before slightly dropping to $1,056,828,000 in 2023. The continuous positive cash flow supported by its core operations indicates a sustainable business model and financial stability, reaffirming confidence in the company's financial practices and long-term viability.

Liquidity of Dover (DOV)

Leverage is declining?

Comparison of company's current leverage ratio to its previous year's leverage ratio is crucial as leverage measures financial risk. A lower leverage indicates reduced risk.

In 2023, Dover's leverage ratio stands at 0.2789 compared to 0.2853 in 2022. Thus, the leverage has decreased, signaling a reduction in the company’s financial risk and an improvement in its ability to meet financial obligations. This trend is favorable, as reflected by the downward shift from 0.2853 to 0.2789, despite historical leverage varying between 0.13 and 0.3543 over the past 20 years. Therefore, Dover adds 1 point for this criterion.

Current Ratio is growing?

The current ratio measures a company's ability to pay short-term obligations with its current assets. An increase is generally seen as a positive indicator of liquidity.

Dover's current ratio increased from 1.1945 in 2022 to 1.3562 in 2023. This marks an improvement in the company's liquidity position. The current ratio gain of 0.1617 points signifies that Dover is becoming better at covering its short-term liabilities with short-term assets, signaling good financial health. The last 20 years of data show variability, with the company's current ratio often trailing the industry median. In 2023, Dover's current ratio of 1.3562 is below the industry median of 1.7757 but indicates improvement. Compared to its 2022 figure, this rise adds 1 point according to the Piotroski score, reflecting a better liquidity situation.

Number of shares not diluted?

Change in shares outstanding assesses whether a company has issued or repurchased shares. Issuing new shares can dilute existing shareholders' value, while share repurchases can indicate management's confidence in the company's future.

From 2022 to 2023, Dover's outstanding shares decreased from 142,681,000 to 139,848,000. This represents a decrease of approximately 2% in the number of shares outstanding. In the context of the Piotroski Score, this would add 1 point for Dover (DOV). Over the last 20 years, the number of outstanding shares has generally seen a downward trend, from 203,614,000 in 2003 to 139,848,000 in 2023. This trend is generally positive for shareholders as it indicates a consistent effort by management to enhance shareholder value through buybacks.

Operating of Dover (DOV)

Cross Margin is growing?

Change in Gross Margin evaluates if a company has improved its pricing strategy or cost structure, impacting profitability.

Comparing the Gross Margin of Dover Corporation (DOV) between 2022 and 2023, there has been an increase from 0.3601 in 2022 to 0.3656 in 2023. This 0.0055 increment, albeit slight, signals a positive trend, indicative of either enhanced cost management or improved pricing strategy. Additionally, when compared to the industry median for 2023, which stands at 0.3492, Dover's gross margin is substantially higher, reflecting its ability to turn revenue into profit more efficiently than its peers. Analyzing the historical data, Dover has generally outperformed the industry's median gross margin over the years, which further emphasizes its operational efficiency. This increase consequently adds 1 point in the Piotroski score, and this consistency reinforces investor confidence in the operational competence of Dover.

Asset Turnover Ratio is growing?

Asset Turnover measures a firm's efficiency in using assets to generate sales, with a higher ratio indicating better performance.

From 2022 to 2023, Dover's Asset Turnover decreased from 0.7989 to 0.7587. This decline suggests that the company has become slightly less efficient in utilizing its assets to produce revenue. Historically, since 2003, Dover's Asset Turnover has seen fluctuations, peaking at 1.0046 in 2004 and dipping significantly in 2009 at 0.7334. This recent trend signals a need for Dover to optimize its asset utilization. No point is added, as the Asset Turnover has not increased.