W.W. Grainger (GWW) versus Dover Corporation (DOV) Critical Review

W.W. Grainger (NYSE: GWW) and Dover Corporation (NYSE:DOV) are both mid-cap industrial products companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of current ratings for W.W. Grainger and Dover Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
W.W. Grainger 4 9 0 0 1.69
Dover Corporation 0 10 7 0 2.41

W.W. Grainger presently has a consensus target price of $178.09, indicating a potential upside of 0.30%. Dover Corporation has a consensus target price of $93.45, indicating a potential downside of 0.65%. Given W.W. Grainger’s higher probable upside, equities analysts plainly believe W.W. Grainger is more favorable than Dover Corporation.

Dividends

W.W. Grainger pays an annual dividend of $5.12 per share and has a dividend yield of 2.9%. Dover Corporation pays an annual dividend of $1.88 per share and has a dividend yield of 2.0%. W.W. Grainger pays out 59.1% of its earnings in the form of a dividend. Dover Corporation pays out 47.1% 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. W.W. Grainger has increased its dividend for 61 consecutive years and Dover Corporation has increased its dividend for 45 consecutive years. W.W. Grainger is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

80.6% of W.W. Grainger shares are held by institutional investors. Comparatively, 86.0% of Dover Corporation shares are held by institutional investors. 9.6% of W.W. Grainger shares are held by company insiders. Comparatively, 2.5% of Dover Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
W.W. Grainger 5.08% 34.03% 11.48%
Dover Corporation 8.61% 13.36% 5.22%

Volatility and Risk

W.W. Grainger has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, Dover Corporation has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
W.W. Grainger $10.22 billion 1.00 $1.40 billion $8.66 20.50
Dover Corporation $7.29 billion 2.01 $1.22 billion $3.99 23.58

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

Summary

W.W. Grainger beats Dover Corporation on 9 of the 17 factors compared between the two stocks.

W.W. Grainger Company Profile

W.W. Grainger, Inc. (Grainger) is a distributor of maintenance, repair and operating (MRO) supplies and other related products and services. The Company offers its products and services to businesses and institutions in the United States and Canada, with presence also in Europe, Asia and Latin America. The Company operates through two segments, which include the United States and Canada. The Company’s business support functions provide coordination and guidance in the areas of accounting and finance, business development, communications and investor relations, compensation and benefits, information systems, health and safety, global supply chain functions, human resources, risk management, internal audit, legal, real estate, security, tax and treasury. The Company’s other businesses also include Zoro Tools, Inc. (Zoro), the single channel online business in the United States, MonotaRO Co. (MonotaRO) in Japan, and operations in Europe, Asia and Latin America.

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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