Reviewing Woodward (WWD) & Dover Corporation (DOV)

Woodward (NASDAQ: WWD) and Dover Corporation (NYSE:DOV) are both mid-cap computer and technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares Woodward and Dover Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Woodward 9.67% 16.12% 7.67%
Dover Corporation 8.91% 14.10% 5.52%

Dividends

Woodward pays an annual dividend of $0.50 per share and has a dividend yield of 0.6%. Dover Corporation pays an annual dividend of $1.88 per share and has a dividend yield of 2.0%. Woodward pays out 15.8% of its earnings in the form of a dividend. Dover Corporation pays out 43.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dover Corporation has increased its dividend for 61 consecutive years. Dover Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

71.2% of Woodward shares are owned by institutional investors. Comparatively, 85.4% of Dover Corporation shares are owned by institutional investors. 5.9% of Woodward shares are owned by company insiders. Comparatively, 2.5% of Dover Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for Woodward and Dover Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Woodward 0 5 3 0 2.38
Dover Corporation 0 10 7 0 2.41

Woodward currently has a consensus target price of $74.75, indicating a potential downside of 5.52%. Dover Corporation has a consensus target price of $94.09, indicating a potential downside of 1.99%. Given Dover Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Dover Corporation is more favorable than Woodward.

Valuation and Earnings

This table compares Woodward and Dover Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Woodward $2.08 billion 2.33 $342.57 million $3.17 24.96
Dover Corporation $7.29 billion 2.05 $1.22 billion $4.30 22.33

Dover Corporation has higher revenue and earnings than Woodward. Dover Corporation is trading at a lower price-to-earnings ratio than Woodward, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Woodward has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500. Comparatively, Dover Corporation has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500.

Summary

Dover Corporation beats Woodward on 11 of the 17 factors compared between the two stocks.

Woodward Company Profile

Woodward, Inc. is an independent designer, manufacturer and service provider of energy control and optimization solutions. The Company designs, produces and services energy control products for various applications. The Company’s segments include Aerospace and Industrial. The Company’s Aerospace segment designs, manufactures and services systems and products for the management of fuel, air, combustion and motion control. The Company’s Industrial segment designs, produces and services systems and products for the management of fuel, air, fluids, gases, electricity, motion and combustion. The Company has production and assembly facilities in the United States, Europe and Asia and South America, and promotes its products and services throughout the world. The Company offers solutions for the aerospace, industrial and energy markets. The Company focuses primarily on serving original equipment manufacturers (OEMs) and equipment packagers.

Dover Corporation Company Profile

Dover Corporation is a diversified global manufacturer delivering equipment and components, specialty systems, consumable supplies, software and digital solutions and support services. The Company’s segments include Energy, Engineered Systems, Fluids and Refrigeration & Food Equipment. The Company’s Energy segment is a provider of solutions and services for production and processing of fuels around the world. Its Engineered Systems segment includes two platforms: Printing & Identification, and Industrials and is focused on the design, manufacture and service of critical equipment and components serving the fast-moving consumer goods, digital textile printing and industrial end markets. Its Fluids segment is focused on the safe handling of critical fluids across the retail fueling, chemical, and industrial end markets. The Refrigeration & Food Equipment segment is a provider of energy efficient equipment and systems serving the commercial refrigeration and food equipment end markets.

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