Tickers in this Article: DOV, DHR, GE, TYC, BRK.A
As a former equity research analyst, I do not usually have much sympathy for my peers. A notable exception, though, is when I look at companies like Dover (NYSE: DOV) - I really do not envy the analysts who have to try to monitor the myriad markets in which this industrial and technological conglomerate operates.

Fortunately, though, everything seems to be working out right now. With tendrils reaching into so many corners of the economy, Dover could still prove to be a solid play on the overall economic recovery that will come sooner or later.

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The Quarter That Was

Financial performance definitely improved in Dover's second quarter. Sales climbed 29%, with "core demand" (that is, revenue not generated by acquisitions or currency movements) rising 24%. Perhaps just as impressive was the fact that all of the company's major segments shared in this performance, as each posted revenue growth in excess of 20% and a book-to-bill ratio above 1.0.

Margins also improved across the board, as the company benefited both from past restructuring efforts and increased efficiencies coming from higher volumes. All in all, operating earnings more than doubled, and net profits jumped 75% (easily surpassing estimates).

Where To From Here?

Although I have a difficult time imagining how Dover will manage to defy whatever the broader trend for the economy will be in the second half, the company's diversification will help. After all, it is not as though every one of Dover's businesses is strong today - there are still pockets of softness in the industrial and engineered systems segments, for instance.

Nevertheless, I think that 1.08 overall corporate book-to-bill is a positive sign of what should be on the way, as well as management's confidence in raising guidance for the remainder of the year. Given the recoveries in end-user markets like energy and both consumer and industrial electronics, it is not hard to see that guidance working out as management expects.

Investors Face Formidable Challenges

Individual investors have some rather formidable challenges when it comes to digging into conglomerates like Danaher (NYSE: DHR), General Electric (NYSE: GE), Tyco (NYSE: TYC) and so on. Fortunately, certain metrics like ROIC work pretty consistently whether a company has a single operating division or 10. After all, what is the value in operating a wide range of businesses if you cannot consistently earn attractive returns on capital?

Unfortunately for Dover, the company does not have the reputation or fan base that has supported other somewhat impenetrable conglomerates like Berkshire Hathaway (NYSE: BRK.A) or GE. To some extent, that is a product of its businesses - a few people may be familiar with Knowles microphones or Heil trailers, but this is otherwise very much a behind-the-scenes sort of company. (For more, see Conglomerates: Cash Cows Or Corporate Chaos?)

Bottom Line

Whether well known or not, this is a name that investors should keep an eye on. Prior to the interruption caused by the recession last year, this company had been experiencing a solid jump of improving its returns and its overall performance. I expect that pattern to continue, and I think the stock is still cheap enough for investors to seriously consider. (For more, see 3 Secrets Of A Successful Company.)

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