Shares of Club name Dover jumped Thursday, as a strong profitability outlook for the year ahead outshined some blemishes in the industrial conglomerate’s fourth-quarter results. The report solidified Dover’s place in our portfolio. Revenue in the fourth quarter rose 1.3% year over year, to $1.93 billion, short versus the $1.95 billion the Street was looking for, according to estimates compiled by LSEG. Adjusted earnings per share (EPS) in the three months ended Dec. 31 totaled $2.20, outpacing expectations of $2.08 per share, LSEG data showed. In afternoon trading, Dover shares were off their highs of the session, trading up nearly 4%, to roughly $205 apiece. Earlier, the stock traded as high as $214.57, setting a new intraday record. The stock’s loftiest close on record was set on Nov. 27, at $206.51 a share. Bottom line Dover did not report the cleanest quarter, but its setup is strong for 2025 thanks to organic bookings reaccelerating in the final three months of 2024 and, according to management, all of its operating segments expected to see expanding margins this year. “We have significant runway for margin improvement through organic growth, positive mix benefits and numerous cost and performance levers,” CEO Richard Tobin said on the call, adding: “With this backdrop, we are poised to deliver double-digit EPS growth in 2025 through a combination of a creative topline growth, margin improvement and value-creating capital allocation.” In light of the rosy outlook, we’re reiterating our buy-equivalent 1 rating and upping our price target to $230 a share from $215. Keep in mind, though, our style is generally not to buy stocks on days that they’re climbing as much as Dover is Thursday. Dover Why we own it : We own Dover as an industrial turnaround story with exposure to mega-themes, most notably the data center buildout to support artificial intelligence computing. The company’s key products for data centers are thermal connectors and heat exchangers. Dover’s business serving the biopharma industry is another attractive area. Dover’s active portfolio management and commitment to capital returns sweeten the investment case. Competitors : Ingersoll Rand , IDEX Corp ., Snap-On , Veralto , among others Weight in portfolio : 3.03% Most recent buy: Dec. 10, 2024 Initiated : May 28, 2024 Dover has now delivered year-over-year bookings growth in five consecutive quarters. It also closed out the three-month period with a book-to-bill ratio above 1, indicating backlog growth. That metric measures the amount of orders received versus orders fulfilled. Tobin also offered some encouraging commentary on Dover’s data center business, a big part of our thesis in the company. It came as investors in recent days were forced to reconsider their bullish outlooks for data center construction in the coming years following the launch of DeepSeek, a Chinese AI startup with a highly efficient large language model that required less computing resources than U.S.-created peers. “The outlook for thermal connectors for liquid cooling data centers is robust,” Tobin said. “Our preemptive capacity expansion has allowed us to maintain industry-best lead times in what has turned out to be a short-cycle business.” Also encouraging for the year ahead is Dover’s large cash position after successfully completing in the fourth quarter the sale of its business that makes trash trucks and trash compacters. The cash could be helpful as Dover’s leadership team considers further adjustments to its wide-ranging portfolio that focuses the company on more attractive end markets. Indeed, Tobin on the call referenced Dover’s “inorganic growth pipeline,” which typically covers M & A activity. “Our preference is to deploy capital towards organic growth investments and our inorganic growth pipeline, which has improved in both quantity and quality of opportunities over the last several months,” Tobin said. “Rest assured, we will proceed with the capital discipline that we have demonstrated in the past.” Quarterly commentary Organic sales rose 0.3% from the year-ago period, on par with the advance we saw during the July-to-September period. However, it was Dover’s order growth that really stood out, with bookings rising 6.5% year over year in the quarter. That is an acceleration from the 5.1% growth observed in the third quarter. Organic bookings is defined as total orders received from customers in the reported period, excluding the impact of foreign-exchange rates and divestitures and acquisitions. Segment profitability and free cash flow results were also better than expected, as the team delivered nearly 60 basis points of segment margin improvement. A basis point is equal to 0.01%. Now here’s a look at how each business segment did in the quarter. Dover’s engineered products segment— a diverse collection of businesses serving end markets such as vehicle repair, aerospace and defense, and industrial automation — saw 2% year-over-year organic growth.. This was helped by a sales increase in vehicle aftermarket and fluid dispensing products, though aerospace and defense volumes declined due to shipment timing. Keep in mind: This segment is where the divested trash-related business was housed, which is why we see such a large decline on a reported basis but an increase organically, which removes the impact of that sale. Clean energy and fueling segment — consisting of products used in transporting and dispensing various fuels including gasoline and compressed natural gas, among others — realized 8% organic growth on an annual basis, driven by strong shipment and order activity for clean energy solutions and above-ground fueling equipment. Pumps and process solutions — home to Dover’s biopharma components business, akin to that of fellow Club holding Danaher , and its thermal connectors for AI servers — recorded organic revenue growth of 3%, driven by “robust shipments and order rates in single-use biopharma components and thermal connectors,” according to the company. Precision components and industrial pumps were also up versus the year-ago period. Climate and sustainability technologies — which provides energy-efficient equipment, components and parts for the commercial refrigeration, heating and cooling and canmaking equipment end-markets — realized record quarterly volume in U.S. CO2 systems. However, revenue was down 13% on an organic basis. Finally, imaging and identification — where we find precision marking and coding, product traceability, brand protection and digital textile printing equipment, along with related consumables, software and services — saw 1% organic revenue growth. Guidance For the full 2025, Dover expects to generate adjusted earnings in the range of $9.30 to $9.50 per share, based on revenue growth of 2% to 4% (or 3% to 5% on an organic basis). The midpoint of $9.40 is in line with the preliminary guidance provided with the third-quarter release. However, it is above the consensus estimate of $9.31 per share, according to LSEG. Dover management also expects free cash flow to be in the range of 14% to 16% of revenue. Taking a look at segment guidance, the team expects margin expansion in each segment with: Low-single digit organic revenue growth in engineered products Mid-single digit organic revenue growth in clean energy and fueling Mid-single digit organic revenue growth in pumps and process solutions Low to mid-single digit organic revenue growth in climate and sustainability technologies Low-single digit organic revenue growth in imaging and identification Dover also expects 20% of its portfolio to grow double digits in aggregate this year. (Jim Cramer’s Charitable Trust is long DOV. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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Shares of Club name Dover jumped Thursday, as a strong profitability outlook for the year ahead outshined some blemishes in the industrial conglomerate’s fourth-quarter results. The report solidified Dover’s place in our portfolio.