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Danaher (DHR) Q2 Earnings: Stock Likely to Disappoint?
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Danaher Corp. (DHR - Free Report) is set to report second-quarter 2016 earnings results before the opening bell on Jul 25.
Last quarter, the company posted a positive earnings surprise of 4.9%. The company has a decent surprise history for the trailing four quarters, having beaten estimates thrice and met the same once, with an average positive surprise of 2.4%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Danaher’s operations have been suffering due to macroeconomic concerns, especially uncertainty in Latin American and European regions like Russia and the Middle East, and this may weigh on the company’s financials this quarter as well.
Prolonged weakness in industrial markets in China, North America, Latin America and the Middle East has acted as a headwind for the company and may prove to be upsetting for the to-be-reported quarter as well. Also, Danaher’s operations remain vulnerable to foreign currency headwinds, as a significant portion of its revenues is derived from regions outside the U.S. Foreign currency fluctuations had a negative impact of around 2% on the company’s top line during the first quarter.
The company’s Instruments platform, particularly the Fluke business, has been witnessing a substantial decline in revenues across all major geographies including the U.S., Western Europe and Latin America. Its Test & Measurement segment has also been suffering due to a slowdown in all major geographies and product lines. These factors could negatively impact Danaher’s top line in the to-be-reported quarter.
Also, Danaher is consistently following its aggressive acquisition strategy. These acquired units complement Danaher’s existing units, and add to the top line.
Our proven model does not conclusively show that Danaher will beat earnings estimate in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: The Earnings ESP for the company currently stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.11.
Zacks Rank: Danaher has a Zacks Rank #5 (Strong Sell). As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Earnings ESP for Potlatch Corporation (PCH - Free Report) is +42.86% and it carries a Zacks Rank #2. The company is expected to release its quarterly results on Jul 26.
AK Steel Holding Corporation has an Earnings ESP of +50.00% and a Zacks Rank #2. The company will report results on Jul 26.
Landec Corp. has an Earnings ESP of +6.67% and a Zacks Rank #3. The company is expected to release earnings results on Jul 26.
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Danaher (DHR) Q2 Earnings: Stock Likely to Disappoint?
Danaher Corp. (DHR - Free Report) is set to report second-quarter 2016 earnings results before the opening bell on Jul 25.
Last quarter, the company posted a positive earnings surprise of 4.9%. The company has a decent surprise history for the trailing four quarters, having beaten estimates thrice and met the same once, with an average positive surprise of 2.4%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Danaher’s operations have been suffering due to macroeconomic concerns, especially uncertainty in Latin American and European regions like Russia and the Middle East, and this may weigh on the company’s financials this quarter as well.
Prolonged weakness in industrial markets in China, North America, Latin America and the Middle East has acted as a headwind for the company and may prove to be upsetting for the to-be-reported quarter as well. Also, Danaher’s operations remain vulnerable to foreign currency headwinds, as a significant portion of its revenues is derived from regions outside the U.S. Foreign currency fluctuations had a negative impact of around 2% on the company’s top line during the first quarter.
The company’s Instruments platform, particularly the Fluke business, has been witnessing a substantial decline in revenues across all major geographies including the U.S., Western Europe and Latin America. Its Test & Measurement segment has also been suffering due to a slowdown in all major geographies and product lines. These factors could negatively impact Danaher’s top line in the to-be-reported quarter.
Also, Danaher is consistently following its aggressive acquisition strategy. These acquired units complement Danaher’s existing units, and add to the top line.
DANAHER CORP Price and EPS Surprise
DANAHER CORP Price and EPS Surprise | DANAHER CORP Quote
Earnings Whispers
Our proven model does not conclusively show that Danaher will beat earnings estimate in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: The Earnings ESP for the company currently stands at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.11.
Zacks Rank: Danaher has a Zacks Rank #5 (Strong Sell). As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Earnings ESP for Potlatch Corporation (PCH - Free Report) is +42.86% and it carries a Zacks Rank #2. The company is expected to release its quarterly results on Jul 26.
AK Steel Holding Corporation has an Earnings ESP of +50.00% and a Zacks Rank #2. The company will report results on Jul 26.
Landec Corp. has an Earnings ESP of +6.67% and a Zacks Rank #3. The company is expected to release earnings results on Jul 26.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>