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Dover (DOV) Wraps Up RegO Buyout, Expands Fueling Solutions

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Dover Corporation (DOV - Free Report) recently completed the buyout of Engineered Controls International, LLC (“RegO”). It will now become part of the Dover Fueling Solutions segment’s OPW Global ("OPW") operating unit.

On Dec 16, the company entered into this deal per which Dover agreed to buy RegO for a cash payment of $631 million, which includes tax step-up benefits with a net present value of approximately $35 million. This buyout will help the company expand its presence in the cryogenic industrial gases end market with robust organic and inorganic growth prospects.

Based in Elon, NC, RegO provides highly-engineered, mission-critical components and services to blue chip customers that facilitate the production, storage and distribution of cryogenic gases utilized in various sets of applications. RegO’s business grew in 2020 and is expected to generate sales of approximately $210 million in the current year. The company registered high-single digits growth in average annual revenue (AAR) in the past three years.

This acquisition is likely to be accretive to Dover’s consolidated EBITDA margins, with possible significant synergy from leveraging its operating scale and capabilities. This buyout will boost Dover’s service offerings for the hydrogen ("H2"), liquefied natural gas ("LNG") and liquefied petroleum gas ("LPG") applications. In fact, the acquisition aligns well with Dover’s focus on enhancing the Fueling Solutions portfolio with a growing presence in clean fuels and other attractive adjacencies.

Dover has a long tradition of undertaking successful acquisitions in diverse end markets. Recently, the company completed three highly-complementary buyouts in radio signal intelligence solutions, industrial 3D visualization software and fueling solutions for alternative fuels like LNG and hydrogen. Last year, Dover acquired Innovation Control Systems (ICS) to expand its offerings in the growing vehicle wash market. The integration of this buyout is ahead of plan. These acquisitions are contributing to the company’s top line. In January 2020, Dover completed the acquisition of Systech International. The buyout supports Dover’s marking and coding portfolio and will expand software and service revenues in the Markem-Imaje segment.

Price Performance

Dover’s shares have gained 45% in the past year compared with the industry’s growth of 10.8%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

Dover currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Greif, Inc. (GEF - Free Report) , SPX Flow and Emerson Electric Co. (EMR - Free Report) . While GEF and FLOW flaunt a Zacks Rank #1 (Strong Buy), EMR carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an estimated earnings growth rate of 11.4% for the current year. In the past 30 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 2%.

In the past year, the company’s shares have gained 31%. Greif has a trailing four-quarter earnings surprise of 16.8%, on average.

SPX Flow has an expected earnings growth rate of 102% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised upward by 1% in the past 30 days.

SPX Flow’s shares have rallied 50.1% in the past year. FLOW has a trailing four-quarter earnings surprise of 40%, on average.

Emerson Electric has a projected earnings growth rate of 19.9% for 2021. The Zacks Consensus Estimate for current-year earnings has been revised upward by 1% in the past 30 days.

EMR’s shares have appreciated 18.3% in a year. Emerson Electric has a trailing four-quarter earnings surprise of 10.7%, on average.


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