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Danaher Corporation (DHR - Analyst Report) is set to report its second quarter 2013 results on Jul 18. The company had earlier reported earnings of 75 cents a share from continuing operations in the first quarter, marginally missing the Zacks Consensus Estimate by a penny. However, this time around, we expect Danaher to comprehensively beat earnings expectations.

Why a Likely Positive Surprise?

Our proven model shows that Danaher is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings Surprise Prediction or ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at 1.18%. This implies a likely positive earnings surprise for the stock.

Zacks Rank #3 (Hold): Stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher probability of beating earnings. The sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement. 

With a Zacks Rank #3 (Hold),and a ESP of 1.18%, Danaher is strong contender for  an earnings beat this quarter.

What is Driving the Better than Expected Earnings?

This leading designer, manufacturer and supplier of professional, medical, industrial and commercial products is expected to reap positive synergies driven by its operating culture titled Danaher Business System (DBS) which improves its business performance in critical areas of quality, delivery, cost and innovation. In addition, the company is likely to continue benefiting from the accretive acquisition of Beckman Coulter along with successful product innovations and go-to-market initiatives.

Moreover, the company aims to remain active on its acquisition binge. During the last quarter, Danaher had signed mergers and acquisitions worth $300 million. Danaher’s strong balance sheet and cash flow generation allow it to invest in further growth opportunities. Danaher expects to make capital investments worth $8 billion over the next two years and we are bullish on its growth initiatives.

Other Stocks to Consider

Danaher is not the only firm looking up this earnings season. We also see likely earnings beats coming from these three industry peers:

  • Gardner Denver Inc. Earnings ESP of +3.18% and a Zacks Rank #2 (Buy)
  • Precision Castparts Corp. (PCP - Analyst Report) Earnings ESP of +0.35% and a Zacks Rank #2 (Buy)
  • General Electric Company (GE - Analyst Report) Earnings ESP of +2.86% and a Zacks Rank #3 (Hold)

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