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5 Reasons Why Danaher (DHR) Stock is Worth Investing in Now
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Danaher Corporation (DHR - Free Report) seems to be an attractive investment option in the conglomerate space. It has healthy growth opportunities and its robust fundamentals, along with an improving operating environment, boosts its appeal. The stock presently carries a Zacks Rank #2 (Buy).
The company, with a market capitalization of $166.1 billion, is based in Washington, DC. It belongs to the Zacks Diversified Operations industry — which is currently at the top 49% (with the rank of 122) of more than 250 Zacks industries.
Year to date, the company’s shares have gained 47.2% as compared with the industry’s growth of 7.5% and the S&P 500’s rise of 10.4%.
Below we discussed why Danaher is a worthy investment option.
Solid Results and Projections: In third-quarter 2020, Danaher’s earnings and sales surpassed estimates by 25.5% and 6.6%, respectively. Compared with the year-ago quarter, earnings surged 62.3% on 34.5% revenue growth. The company is well positioned to reap benefits from solid product offerings, initiatives under Danaher Business System, and inorganic opportunities, among others in the quarters to come.
Danaher predicts core revenues to increase in high-single digits in the fourth quarter. Including Cytiva’s contribution, core revenues in the quarter will likely be up in low-double digits.
The Zacks Consensus Estimates for the company’s revenues is pegged at $6.35 billion for the fourth quarter and $21.87 billion for 2020. These estimates represent year-over-year growth of 30.5% and 9.7%, respectively.
Segmental Strength: Danaher’s growth prospects within its Life Sciences and Diagnostics segments are likely top-line drivers for the quarters ahead. Healthy demand for bioprocessing products is anticipated to be a major driver for the Life Sciences segment. Notably, the company has upped the production capacity at Pall Biotech and Cytiva in order to cater to rising demand for products.
Meanwhile, it believes growth in demand for molecular testing products will aid the Diagnostics segment. In the fourth quarter, nearly 8 million Cepheid tests are anticipated to be shipped.
Buyouts/Divestments: Acquisitions have proven to be a major growth driver for Danaher over time. Notably, it acquired Labcyte Corporation in 2019 and bought BioPharma business of General Electric Company (GE - Free Report) in March 2020. The acquired BioPharma business presently operates under the Life Sciences segment and boosted its sales by 5% in third-quarter 2020. Also, Cytive is expected to contribute 300-400 basis points (bps) to core sales in the current quarter.
In addition to buyouts, Danaher believes in disposing non-core/non-essential businesses or assets in the best interest of shareholders. It offloaded its dental business to Envista and later its stake in Envista in 2019. In April 2020, Danaher divested some assets from the Life Sciences segment.
It is worth mentioning here that acquisitions/divestments enhanced Danaher’s sales by 24.5% in third-quarter 2020.
Shareholders’ Rewards: Danaher believes in rewarding shareholders handsomely through dividend payments. In the first nine months of 2020, the company distributed dividends totaling $445.4 million to its shareholders, reflecting an increase of 15.7% from the year-ago period.
It is worth mentioning here that the company announced a hike of one cent per share in its quarterly dividend rate this February. Healthy cash flow position will help the company reward shareholders.
Earnings Estimate Revisions: The company’s earnings estimates have moved north in the past 30 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $1.81 for the fourth quarter, up 14.6% from the 30-day-ago figure.
In addition, the consensus estimate for 2020 has moved 9.9% north to $6.02 in the past 30 days and 10.3% to $6.99 for 2021.
In the past 30 days, earnings estimates for these companies improved for the current year. Also, earnings surprise for the last four reported quarters, on average, was 1.85% for 3M and 14.59% for Crane.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
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5 Reasons Why Danaher (DHR) Stock is Worth Investing in Now
Danaher Corporation (DHR - Free Report) seems to be an attractive investment option in the conglomerate space. It has healthy growth opportunities and its robust fundamentals, along with an improving operating environment, boosts its appeal. The stock presently carries a Zacks Rank #2 (Buy).
The company, with a market capitalization of $166.1 billion, is based in Washington, DC. It belongs to the Zacks Diversified Operations industry — which is currently at the top 49% (with the rank of 122) of more than 250 Zacks industries.
Year to date, the company’s shares have gained 47.2% as compared with the industry’s growth of 7.5% and the S&P 500’s rise of 10.4%.
Below we discussed why Danaher is a worthy investment option.
Solid Results and Projections: In third-quarter 2020, Danaher’s earnings and sales surpassed estimates by 25.5% and 6.6%, respectively. Compared with the year-ago quarter, earnings surged 62.3% on 34.5% revenue growth. The company is well positioned to reap benefits from solid product offerings, initiatives under Danaher Business System, and inorganic opportunities, among others in the quarters to come.
Danaher predicts core revenues to increase in high-single digits in the fourth quarter. Including Cytiva’s contribution, core revenues in the quarter will likely be up in low-double digits.
The Zacks Consensus Estimates for the company’s revenues is pegged at $6.35 billion for the fourth quarter and $21.87 billion for 2020. These estimates represent year-over-year growth of 30.5% and 9.7%, respectively.
Segmental Strength: Danaher’s growth prospects within its Life Sciences and Diagnostics segments are likely top-line drivers for the quarters ahead. Healthy demand for bioprocessing products is anticipated to be a major driver for the Life Sciences segment. Notably, the company has upped the production capacity at Pall Biotech and Cytiva in order to cater to rising demand for products.
Meanwhile, it believes growth in demand for molecular testing products will aid the Diagnostics segment. In the fourth quarter, nearly 8 million Cepheid tests are anticipated to be shipped.
Buyouts/Divestments: Acquisitions have proven to be a major growth driver for Danaher over time. Notably, it acquired Labcyte Corporation in 2019 and bought BioPharma business of General Electric Company (GE - Free Report) in March 2020. The acquired BioPharma business presently operates under the Life Sciences segment and boosted its sales by 5% in third-quarter 2020. Also, Cytive is expected to contribute 300-400 basis points (bps) to core sales in the current quarter.
In addition to buyouts, Danaher believes in disposing non-core/non-essential businesses or assets in the best interest of shareholders. It offloaded its dental business to Envista and later its stake in Envista in 2019. In April 2020, Danaher divested some assets from the Life Sciences segment.
It is worth mentioning here that acquisitions/divestments enhanced Danaher’s sales by 24.5% in third-quarter 2020.
Shareholders’ Rewards: Danaher believes in rewarding shareholders handsomely through dividend payments. In the first nine months of 2020, the company distributed dividends totaling $445.4 million to its shareholders, reflecting an increase of 15.7% from the year-ago period.
It is worth mentioning here that the company announced a hike of one cent per share in its quarterly dividend rate this February. Healthy cash flow position will help the company reward shareholders.
Earnings Estimate Revisions: The company’s earnings estimates have moved north in the past 30 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $1.81 for the fourth quarter, up 14.6% from the 30-day-ago figure.
In addition, the consensus estimate for 2020 has moved 9.9% north to $6.02 in the past 30 days and 10.3% to $6.99 for 2021.
Danaher Corporation Price and Consensus
Danaher Corporation price-consensus-chart | Danaher Corporation Quote
Other Key Picks
Two other top-ranked stocks in the industry are 3M Company (MMM - Free Report) and Crane Co. (CR - Free Report) . Both the companies carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for these companies improved for the current year. Also, earnings surprise for the last four reported quarters, on average, was 1.85% for 3M and 14.59% for Crane.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>