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Danaher (DHR) to Gain on Segmental Strength, Inorganic Actions
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Investors seeking exposure in the conglomerate space may find Danaher Corporation (DHR - Free Report) an attractive investment option. It has solid growth opportunities and its earnings estimates too have been revised upward. The company is based in Washington, DC, and has a $158.4-billion market capitalization.
The company presently carries a Zacks Rank #2 (Buy). It belongs to the Zacks Diversified Operations industry — which is currently at the top 42% (with the rank of 106) of more than 250 Zacks industries.
In the past year, the company’s shares have gained 49.1% as compared with the industry’s growth of 27.3% and the S&P 500’s rise of 30.8%.
Below we discussed why Danaher is a worthy investment option.
Impressive Q4 Results and 2021 View: Danaher’s fourth-quarter earnings surpassed estimates by 13%, while sales beat the same by 0.1%. Also, earnings expanded 62.5% year over year on the back of sales growth and margin improvement. A healthy balance sheet, dedicated workforce and a solid product portfolio are likely to benefit the company in the quarters ahead.
For first-quarter 2021, the company anticipates core revenue growth in mid- to high-teens and for 2021 it expects growth in low-double digits. Notably, the COVID-related tailwinds are anticipated to boost sales by 13% and 5% in the first quarter and 2021, respectively.
Segmental Growth Opportunities: In the quarters ahead, the Life Sciences segment is anticipated to benefit from the solid demand for bioprocessing products. Notably, the company has increased the production capacity of Pall Biotech and Cytiva. In addition, the segment is likely to gain from growth in non-COVID bioprocessing business.
In addition, solid demand for molecular testing-related products will likely aid the Diagnostics segment in the quarters ahead. The company is likely to provide 9 million Cepheid tests quarterly in 2021. Also, the Environmental & Applied Solutions segment will likely gain from healthy equipment demand and a strong consumables business.
Benefits from Inorganic Actions: Danaher has been benefiting from acquisitions and divestments over time. In 2019, the company acquired Labcyte Corporation and divested its dental business. Also, Danaher added General Electric Company’s (GE - Free Report) BioPharma business to its portfolio in March 2020. The buyout, known as Cytiva, has been aiding Danaher’s biologics workflow solutions business. In addition, the company divested certain assets belonging to its Life Sciences segment to Sartorius AG in April 2020.
It is worth mentioning here that acquisitions/divestments enhanced Danaher’s sales by 24.5% in fourth-quarter 2020.
Shareholders’ Rewards: The company has been rewarding its shareholders with dividend payments over time. In 2020, it distributed dividends of $615 million to its shareholders, reflecting an increase of 16.7% from the previous year.
It is worth mentioning here that the company announced a hike of 16.7% in its quarterly dividend rate this February. Healthy cash flow position will likely help the company reward shareholders.
Earnings Estimate Revisions: Danaher’s earnings estimates have increased in the past 30 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $1.67 for the first quarter, up 7.1% from the 30-day-ago figure.
In addition, the consensus estimate for 2021 has moved 3.2% north to $7.50 in the past 30 days and 5.2% to $8.04 for 2022.
Danaher’s shares have outperformed other companies in the industry, including 3M Company (MMM - Free Report) and Carlisle Companies Incorporated (CSL - Free Report) . In the past year, shares of 3M have gained 19%, while that of Carlisle Companies is at a break-even point.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.9% per year.
These 7 were selected because of their superior potential for immediate breakout.
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Danaher (DHR) to Gain on Segmental Strength, Inorganic Actions
Investors seeking exposure in the conglomerate space may find Danaher Corporation (DHR - Free Report) an attractive investment option. It has solid growth opportunities and its earnings estimates too have been revised upward. The company is based in Washington, DC, and has a $158.4-billion market capitalization.
The company presently carries a Zacks Rank #2 (Buy). It belongs to the Zacks Diversified Operations industry — which is currently at the top 42% (with the rank of 106) of more than 250 Zacks industries.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past year, the company’s shares have gained 49.1% as compared with the industry’s growth of 27.3% and the S&P 500’s rise of 30.8%.
Below we discussed why Danaher is a worthy investment option.
Impressive Q4 Results and 2021 View: Danaher’s fourth-quarter earnings surpassed estimates by 13%, while sales beat the same by 0.1%. Also, earnings expanded 62.5% year over year on the back of sales growth and margin improvement. A healthy balance sheet, dedicated workforce and a solid product portfolio are likely to benefit the company in the quarters ahead.
For first-quarter 2021, the company anticipates core revenue growth in mid- to high-teens and for 2021 it expects growth in low-double digits. Notably, the COVID-related tailwinds are anticipated to boost sales by 13% and 5% in the first quarter and 2021, respectively.
Segmental Growth Opportunities: In the quarters ahead, the Life Sciences segment is anticipated to benefit from the solid demand for bioprocessing products. Notably, the company has increased the production capacity of Pall Biotech and Cytiva. In addition, the segment is likely to gain from growth in non-COVID bioprocessing business.
In addition, solid demand for molecular testing-related products will likely aid the Diagnostics segment in the quarters ahead. The company is likely to provide 9 million Cepheid tests quarterly in 2021. Also, the Environmental & Applied Solutions segment will likely gain from healthy equipment demand and a strong consumables business.
Benefits from Inorganic Actions: Danaher has been benefiting from acquisitions and divestments over time. In 2019, the company acquired Labcyte Corporation and divested its dental business. Also, Danaher added General Electric Company’s (GE - Free Report) BioPharma business to its portfolio in March 2020. The buyout, known as Cytiva, has been aiding Danaher’s biologics workflow solutions business. In addition, the company divested certain assets belonging to its Life Sciences segment to Sartorius AG in April 2020.
It is worth mentioning here that acquisitions/divestments enhanced Danaher’s sales by 24.5% in fourth-quarter 2020.
Shareholders’ Rewards: The company has been rewarding its shareholders with dividend payments over time. In 2020, it distributed dividends of $615 million to its shareholders, reflecting an increase of 16.7% from the previous year.
It is worth mentioning here that the company announced a hike of 16.7% in its quarterly dividend rate this February. Healthy cash flow position will likely help the company reward shareholders.
Earnings Estimate Revisions: Danaher’s earnings estimates have increased in the past 30 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $1.67 for the first quarter, up 7.1% from the 30-day-ago figure.
In addition, the consensus estimate for 2021 has moved 3.2% north to $7.50 in the past 30 days and 5.2% to $8.04 for 2022.
Danaher Corporation Price and Consensus
Danaher Corporation price-consensus-chart | Danaher Corporation Quote
Other Key Picks
Danaher’s shares have outperformed other companies in the industry, including 3M Company (MMM - Free Report) and Carlisle Companies Incorporated (CSL - Free Report) . In the past year, shares of 3M have gained 19%, while that of Carlisle Companies is at a break-even point.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.9% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>