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Danaher (DHR) to Report Q1 Earnings: What's in the Offing?

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Danaher Corporation (DHR - Free Report) is set to release first-quarter 2019 results on Apr 18, before the market opens.

The company reported better-than-expected results in the last four quarters, the average positive earnings surprise being 3.89%. In the last reported quarter, its earnings of $1.28 per share surpassed the Zacks Consensus Estimate of $1.27.

In the past three months, the company’s shares have increased 23.6% compared with the industry’s growth of 14.8%.



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

Factors to Influence Q1 Results

The company has been gaining from Danaher Business System (“DBS”), which includes initiatives like focus on providing superior product quality, product innovation, efficient workforce and shareholder-friendly policies. Benefits from DBS, investments targeting business growth and improvement in the cost structure will be boons for Danaher in the to-be-reported quarter.

In addition to these tailwinds, the company’s acquisitive nature — evident from buyouts of Integrated DNA Technologies (April 2018), Blue Software (July 2018), Labcyte Corporation (January 2019) and General Electric Company’s (GE) BioPharma business (not yet completed) — will strength businesses. Also, the spin-off of the Dental business will likely be a boon.

On the flip side, costs associated with growth investments, adverse impact of unfavorable movements in foreign currencies and tariffs woes remain concerning for Danaher’s margins.

For the first quarter of 2019, the company anticipates adjusted earnings of $1.00-$1.03 per share. Core sales are predicted to grow roughly 4%.

For Life Sciences, existing product offerings, efforts to develop products, increasing business opportunities in emerging and developed nations, and acquired assets (including Integrated DNA Technologies) will be advantageous. For the first quarter of 2019, the Zacks Consensus Estimate for this segment’s revenues is projected to be $1,579 million, up 7% from the year-ago reported figure and 12% below sequentially. Notably, average sales beat of 3.66% in the last four quarters is quite encouraging.

Growing demand for products (like Videojet, Esko and X-Rite), business diversification in various end markets and innovative capabilities should be advantageous for the company’s Environmental & Applied Solutions segment. However, margins might suffer from adverse impact of product development costs and growth investments. The Zacks Consensus Estimate for revenues for the first quarter is pegged at $1,054 million, up 2.6% over the year-ago reported figure and down 6.5% sequentially. Average sales beat of 1.97% in the last four quarters is quite encouraging.

For Diagnostics, product innovation, business expansion in the international arena and effective marketing activities will be beneficial.

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: The company currently has earnings ESP of 0.0% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.01.

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 #2. This combined with a 0% ESP makes earnings surprise prediction difficult.

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 according to our model, these have the right combination of elements to post an earnings beat this quarter:

Chart Industries, Inc. (GTLS - Free Report) has an Earnings ESP of +8.66% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

HD Supply Holdings, Inc. (HDS - Free Report) currently has an Earnings ESP of +0.81% and a Zacks Rank #3.

Colfax Corporation (CFX - Free Report) presently has an Earnings ESP of +1.25% and a Zacks Rank #3.

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