Dover Corp (DOV) reaps benefits from the growing demand for smartphones by supplying manufacturers with products and components, and the company sees further improvement in performance by making its acquisitions accretive to the overall company’s business, says Nick Heymann, Co-Group Head at William Blair & Company, L.L.C.
“Today, the intended benefits from Dover’s Sound Solutions acquisition are now coming to fruition, and the consumer electronics market that they supply, particularly smartphones, continues to grow at 20% or 25%. But more importantly, the new emerging smartphone manufacturers that are growing fastest, such as Samsung (005930.KS), LG (066570.KS) and Motorola (MSI), are now more likely to bundle their products from the components that Dover‘s Communication Technologies businesses, including Sound Solutions’, but also Knowles’, supply,” Heymann said.
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Heymann says DOV‘s large acquisition of of Sound Solutions has finally become accretive, and the company is now back to generating healthier levels of free cash flow and allocating it to smaller targets, such as the recent acquisition of Anthony International.
“Dover has worked to pare its least strategic noncore businesses while simultaneously strengthening its most important core businesses. I think the result is likely to be a much more dynamic set of growth fundamentals than most envision, and investors’ confidence that Dover management will more optimally allocate the company’s FCF with a higher degree of success going forward should enable better overall growth, improved ROIC and enhanced forward fundamental visibility than in the recent past,” Heymann said.
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