Briefing From The Editor -- DHR Stock

Danaher logged a -1.1% change during today's afternoon session, and is now trading at a price of $237.28 per share.

Danaher returned losses of -607.0% last year, with its stock price reaching a high of $303.82 and a low of $221.22. Over the same period, the stock underperformed the S&P 500 index by -2223.0%. As of April 2023, the company's 50-day average price was $235.78. Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. Based in Washington, DC, the large-cap Industrials company has 79,000 full time employees. Danaher has offered a 0.4% dividend yield over the last 12 months.

Growing Revenues With Increasing Reinvestment in the Business:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $17,911 $22,284 $29,453 $31,471
Gross Margins 55.7% 56.0% 61.0% 60.2%
Operating Margins 18.2% 19.0% 25.4% 27.6%
Net Margins 16.8% 16.36% 21.84% 22.91%
Net Income (MM) $3,008 $3,646 $6,433 $7,209
Net Interest Expense (MM) 30 -204 -227 -170
Net Interest Expense (MM) $30 -$204 -$227 -$170
Depreciation & Amort. (MM) -$1,190 -$1,775 -$2,168 -$2,222
Earnings Per Share $4.05 $4.89 $8.61 $9.26
EPS Growth n/a 20.74% 76.07% 7.55%
Diluted Shares (MM) 726 719 737 738
Free Cash Flow (MM) $3,316 $5,417 $7,064 $7,367
Capital Expenditures (MM) -$636 -$791 -$1,294 -$1,152
Net Current Assets (MM) -$6,203 -$22,582 -$26,359 -$18,377
Current Ratio 5.19 1.86 1.43 1.89
Long Term Debt (MM) $21,517 $21,193 $22,168 $19,086
Net Debt / EBITDA 0.36 2.34 1.94 1.28

Danaher has growing revenues and increasing reinvestment in the business, strong margins with a positive growth rate, and exceptional EPS growth. The company also benefits from a pattern of improving cash flows, wider gross margins than its peer group, and healthy leverage. Furthermore, Danaher has a decent current ratio.

Danaher's Valuation Is in Line With Its Sector Averages:

Danaher has a trailing twelve month P/E ratio of 25.5, compared to an average of 20.49 for the Industrials sector. Based on its EPS guidance of $10.34, the company has a forward P/E ratio of 22.8. According to the 20.6% compound average growth rate of Danaher's historical and projected earnings per share, the company's PEG ratio is 1.23. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.3%. On this basis, the company's PEG ratio is 2.48. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing Danaher in terms of its equity because its P/B ratio is 3.47 while the sector average is 3.78. The company's shares are currently trading 133.8% above their Graham number. In conclusion, Danaher's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.

Danaher Has an Average Rating of Buy:

The 20 analysts following Danaher have set target prices ranging from $220.0 to $325.0 per share, for an average of $274.9 with a buy rating. As of April 2023, the company is trading -14.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Danaher has a very low short interest because 0.6% of the company's shares are sold short. Institutions own 79.7% of the company's shares, and the insider ownership rate stands at 10.77%, suggesting a large amount of insider shareholders. The largest shareholder is the Vanguard Group, Inc., whose 7% stake in the company is worth $13,074,615,477.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.