DHR

Quick Report on Danaher (DHR)

We've been asking ourselves recently if the market has placed a fair valuation on Danaher. Let's dive into some of the fundamental values of this large-cap Industrials company to determine if there might be an opportunity here for value-minded investors.

A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:

Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 22.19 and an average price to book (P/B) ratio of 4.06. In contrast, Danaher has a trailing 12 month P/E ratio of 28.7 and a P/B ratio of 3.21.

When we divide Danaher's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -19.8. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.

Growing Revenues With Increasing Reinvestment in the Business:

2018 2019 2020 2021 2022 2023
Revenue (MM) $19,893 $17,911 $22,284 $29,453 $31,471 $29,566
Revenue Growth n/a -9.96% 24.42% 32.17% 6.85% -6.05%
Operating Margins 15% 18% 20% 26% 28% 24%
Net Margins 13% 17% 16% 22% 23% 24%
Net Income (MM) $2,653 $3,008 $3,646 $6,433 $7,209 $7,209
Net Interest Expense (MM) $137 $108 $494 $456 $211 $272
Depreciation & Amort. (MM) $562 $564 $1,138 $1,450 $1,484 $1,511
Earnings Per Share $3.74 $4.05 $4.89 $8.61 $9.66 $7.939999999999999
EPS Growth n/a 8.29% 20.74% 76.07% 12.2% -17.81%
Diluted Shares (MM) 710 726 719 737 737 754
Free Cash Flow (MM) $3,438 $3,316 $5,424 $7,064 $7,367 $7,209
Capital Expenditures (MM) $584 $636 $791 $1,294 $1,152 $1,310
Current Ratio 1.47 5.19 1.86 1.43 1.89 2.26
Total Debt (MM) $9,740 $21,729 $21,204 $22,176 $19,677 $22,060
Net Debt / EBITDA 2.48 0.47 2.69 2.17 1.35 1.12

Danaher benefits from growing revenues and increasing reinvestment in the business, decent operating margins with a positive growth rate, and a strong EPS growth trend. The company's financial statements show irregular cash flows and healthy leverage.

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.

IN FOCUS