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Danaher (DHR) to Report Q3 Earnings: Is a Beat in Store?

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Danaher Corporation (DHR - Free Report) is set to release third-quarter 2018 results on Oct 18, before the market opens.

The company reported better-than-expected results in the last four quarters, pulling off an average positive earnings surprise of 4.95%. In the last reported quarter, the company’s earnings of $1.15 per share were above the Zacks Consensus Estimate of $1.09.

In the past three months, the company’s shares have increased 2.4% compared with 1.8% decline recorded by the industry it belongs to.



Let us see how things are shaping up for Danaher this quarter.

Factors to Influence Q3 Results

Danaher anticipates continuing to realize gains from its Danaher Business System (“DBS”). Implementation of DBS initiatives enabled the company to focus more on product innovation, superior product quality, building efficient workforce and enhancing shareholder value. Moreover, growth investments made in the past are gradually yielding benefits. Dental business spin-off is anticipated to boost the company’s shareholder value.

For the third quarter of 2018, Danaher anticipates adjusted earnings of $1.05-$1.08 per share. Core sales are predicted to grow 4-5%.

For Life Sciences, introduction of products, as well as rising business in developed markets and emerging nations, might prove beneficial. Further, the buyout of Integrated DNA Technologies will strengthen the segment’s growth opportunities.

For the third quarter of 2018, the Zacks Consensus Estimate for revenues generated from the Life Sciences segment is projected to be $1,519 million, below $1,605 million generated in the last reported quarter. Despite this, sales beat in the last three quarters, with a positive average of 3.56%, is quite encouraging.

Growing businesses in multiple end markets, as well as solid product offerings, might aid Environmental & Applied Solutions. However, margins might suffer from adverse impact of productivity initiatives and growth investments.

The Zacks Consensus Estimate for revenues in the third quarter is pegged at $1,041 million, 4.7% below $1,092 million generated in the last reported quarter. Despite this, impressive average positive sales surprise of 1.56% for the last five quarters is encouraging.

For Diagnostics, the company’s focus on sales and marketing initiatives, as well as research and development of products, will help in solidifying product offerings.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The case with Danaher is given below.

Earnings ESP: Earnings ESP of Danaher is currently +1.15% as the Most Accurate Estimate of $1.09 is above the Zacks Consensus Estimate of $1.07.

Danaher Corporation Price, Consensus and EPS Surprise
 

Danaher Corporation Price, Consensus and EPS Surprise | Danaher Corporation Quote

Zacks Rank: Danaher currently carries a Zacks Rank #3. This combined with a positive ESP points toward high probability of recording an earnings beat in the quarter.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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

Tetra Tech, Inc. (TTEK - Free Report) has an Earnings ESP of +0.96% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flowserve Corporation (FLS - Free Report) has an Earnings ESP of +1.72% and a Zacks Rank #2.

Rexnord Corporation (RXN - Free Report) has an Earnings ESP of +2.02% and a Zacks Rank #3.

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