It hasn't been a great morning session for Danaher investors, who have watched their shares sink by -1.3% to a price of $272.47. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Danaher's Valuation Is in Line With Its Sector Averages:
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 25.19 and an average price to book (P/B) ratio of 3.17. In contrast, Danaher has a trailing 12 month P/E ratio of 50.0 and a P/B ratio of 3.95.
Danaher's PEG ratio is 5.23, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Wider Gross Margins Than the Industry Average of 34.68%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $19,893 | $17,911 | $22,284 | $24,802 | $26,643 | $23,890 |
| Gross Margins | 48% | 56% | 56% | 61% | 61% | 59% |
| Net Margins | 13% | 17% | 16% | 26% | 27% | 20% |
| Net Income (M) | $2,651 | $3,008 | $3,646 | $6,433 | $7,209 | $4,764 |
| Net Interest Expense (M) | $137 | $108 | $275 | $231 | $204 | $286 |
| Depreciation & Amort. (M) | $562 | $564 | $637 | $674 | $698 | $675 |
| Diluted Shares (M) | 710 | 726 | 719 | 737 | 737 | 743 |
| Earnings Per Share | $3.74 | $4.05 | $4.89 | $8.61 | $9.66 | $6.38 |
| EPS Growth | n/a | 8.29% | 20.74% | 76.07% | 12.2% | -33.95% |
| Avg. Price | $98.93 | $131.36 | $183.49 | $272.8 | $269.24 | $272.47 |
| P/E Ratio | 26.17 | 31.96 | 36.92 | 31.11 | 27.47 | 42.31 |
| Free Cash Flow (M) | $3,438 | $3,316 | $5,417 | $7,118 | $7,401 | $5,781 |
| CAPEX (M) | $584 | $636 | $791 | $1,240 | $1,118 | $1,383 |
| EV / EBITDA | 21.57 | 24.58 | 29.36 | 30.33 | 25.12 | 36.2 |
| Total Debt (M) | $9,792 | $21,941 | $21,215 | $22,184 | $20,268 | $20,097 |
| Net Debt / EBITDA | 2.49 | 0.53 | 3.12 | 2.78 | 1.73 | 2.42 |
| Current Ratio | 1.47 | 5.19 | 1.86 | 1.43 | 1.89 | 1.68 |
Danaher has growing revenues and increasing reinvestment in the business, generally positive cash flows, and wider gross margins than its peer group. The company also benefits from positive EPS growth, a decent current ratio of 1.68, and healthy leverage levels.
