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Can Danaher (DHR) Maintain its Beat Streak in Q1 Earnings?

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Danaher Corporation (DHR - Free Report) is scheduled to report first-quarter 2018 results on Apr 19, before the opening bell. Last quarter, the company reported earnings of $1.19 cents per share, delivering a positive surprise of 2.6%.

We expect Danaher to score an earnings beat in the to-be-reported quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Danaher has the right combination of two key ingredients. 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 perfectly the case here as you will see below:

Zacks ESP: Danaher has an Earnings ESP of +2.04% as the Most Accurate estimate of 95 cents is pegged higher than the Zacks Consensus Estimate of 93 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #2, which when combined with a positive ESP makes us reasonably confident of an earnings beat.

Conversely, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Reasons Behind Better-Than-Expected Results

Danaher has successfully repositioned itself as a healthcare company by expanding its footprint in the healthcare and dental markets. These markets are expected to benefit from rise in the aging population and increased spending on healthcare and fitness. Also, prospects in pharma and clinical end-markets bode well for the company. Per Danaher, it is well-positioned in the biopharma business, which in turn is expected to prove conductive to its operating profit and bottom-line growth for the first quarter.

Additionally, within the Danaher Business System (‘DBS’) framework, the company’s number of strategic initiatives with respect to idea generation, product development and others have been significantly boosting its key financials over the past few quarters. For instance, in fourth-quarter 2017, DBS contributed appreciably to the company’s impressive run in delivering year-over-year core revenue growth, earnings improvement and margin expansion.

Meanwhile, the company’s recent acquisitions are acting as major profit churners. The buyouts  are anticipated to boost top-line growth in the quarter under review. This apart, Danaher expects core growth rate to accelerate moving ahead, in the light of improving order trends and recent acquisitions like Cepheid and Phenomenex. Notably, Phenomenex has meaningfully enhanced Danaher’s Life Sciences portfolio and is expected to help the company achieve a double-digit return on investment in less than five years.

Further, the company’s continuous focus on introduction of products has enabled it to penetrate new markets and gain competitive edge over its peers. Of late, Danaher has also witnessed compelling secular market drivers across each of its platforms and believes that rapid market traction of the newly launched products should continue supplementing sales performance in the upcoming quarters as well.

Other Stocks to Consider

Here are some other companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Crane Company (CR - Free Report) has an Earnings ESP of +1.58% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Honeywell International Inc. (HON - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank of 3.

Parker-Hannifin Corporation (PH - Free Report) has an Earnings ESP of +2.38% and a Zacks Rank #3.

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