Dover (NYSE:DOV) versus Graham (NYSE:GHM) Financial Analysis

Dover (NYSE:DOV) and Graham (NYSE:GHM) are both industrials companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Insider and Institutional Ownership

84.5% of Dover shares are held by institutional investors. Comparatively, 69.5% of Graham shares are held by institutional investors. 1.3% of Dover shares are held by insiders. Comparatively, 6.0% of Graham shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Dover and Graham, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dover	0	4	9	0	2.69
Graham	0	3	3	0	2.50

Dover currently has a consensus price target of $225.67, suggesting a potential upside of 4.92%. Graham has a consensus price target of $81.67, suggesting a potential downside of 4.47%. Given Dover’s stronger consensus rating and higher probable upside, research analysts clearly believe Dover is more favorable than Graham.

Dividends

Dover pays an annual dividend of $2.08 per share and has a dividend yield of 1.0%. Graham pays an annual dividend of $0.44 per share and has a dividend yield of 0.5%. Dover pays out 26.2% of its earnings in the form of a dividend. Graham pays out 32.6% 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 has increased its dividend for 70 consecutive years. Dover is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Dover and Graham”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dover	$8.09 billion	3.58	$1.09 billion	$7.94	27.09
Graham	$237.56 million	3.98	$12.23 million	$1.35	63.32

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

Risk & Volatility

Dover has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500. Comparatively, Graham has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Dover	13.52%	17.87%	10.06%
Graham	6.28%	13.26%	6.07%

Summary

Dover beats Graham on 14 of the 17 factors compared between the two stocks.

About Dover

Dover Corporation provides equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services worldwide. The company's Engineered Products segment provides various equipment, component, software, solution, and services that are used in vehicle aftermarket, waste handling, industrial automation, aerospace and defense, industrial winch and hoist, and fluid dispensing end-market. This segment offers manual and power clamp, rotary and linear mechanical indexer, conveyor, pick and place unit, glove port, and manipulator, as well as end-of-arm robotic gripper, slide, and end effector; winches, hoists, bearings, drives, and electric monitoring system; and radio frequency and microwave filters and switches, and signal intelligence solutions. Its Clean Energy & Fueling segment offers component, equipment, and software and service solution enabling safe storage and transport of fuel, cryogenic gases, and hazardous fluids, as well as operation of retail fueling and vehicle wash establishment. The company's Imaging & Identification segment provides precision marking and coding, product traceability equipment, brand protection, and digital textile printing equipment and solution, as well as related consumable, software, and service to packaged and consumer goods, pharmaceutical, manufacturing, fashion and apparel, and other end-market. Its Pumps & Process Solutions segment manufactures specialty pump, connector, flow meter, fluid connecting solution, plastics and polymer processing equipment, and engineered components for rotating and reciprocating machines. The company's Climate & Sustainability Technologies segment manufactures refrigeration system, refrigeration display case, commercial glass refrigerator and freezer door, and brazed plate heat exchanger for industrial heating and cooling, and residential climate control applications. The company was incorporated in 1947 and is headquartered in Downers Grove, Illinois.

About Graham

Graham Corporation, together with its subsidiaries, designs and manufactures fluid, power, heat transfer, and vacuum equipment for chemical and petrochemical processing, defense, space, petroleum refining, cryogenic, energy, and other industries. It offers power plant systems, including ejectors and surface condensers; torpedo ejection, propulsion, and power systems, such as turbines, alternators, regulators, pumps, and blowers; and thermal management systems comprising pumps, blowers, and drive electronics for defense sector. The company also provides rocket propulsion systems consisting of turbopumps and fuel pumps; cooling systems, which include pumps, compressors, fans, and blowers; and life support systems that comprise fans, pumps, and blowers for space industry. In addition, it offers heat transfer and vacuum systems, including ejectors, process and surface condensers, liquid ring pumps, heat exchangers, and nozzles; power generation systems, such as turbines, generators, compressors, and pumps; and thermal management systems comprising pumps, blowers, and electronics for energy sector. Further, the company offers heat transfer and vacuum systems consisting of ejectors, process and surface condensers, liquid ring pumps, heat exchangers, and nozzles for chemical and petrochemical processing industry. The company also services and sells spare parts for its equipment. It sells its products directly in the United States, the Middle East, Canada, Asia, South America, and internationally. Graham Corporation was founded in 1936 and is headquartered in Batavia, New York.