We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Danaher (DHR) Poised to Gain From Buyouts Despite Cost Woes
Read MoreHide Full Article
We issued an updated research report on Danaher Corporation (DHR - Free Report) on Mar 6.
The company is a global conglomerate that specializes in products and services meant for use in the professional, commercial, industrial and medical products. It is headquartered in Washington, DC.
Many tailwinds and headwinds are impacting Danaher’s performance. Let’s delve deeper.
Factors Favoring Danaher
Healthy Projections: For 2020, the company anticipates benefiting from solid commercial execution, product innovation and Danaher Business System (DBS) initiatives. Adjusted earnings in the year are anticipated to be $4.80-$4.90 per share, suggesting an increase from $4.42 reported in 2019.
Also, it believes that core sales in the first quarter of the year will grow 6-6.5%, suggesting growth from 5.5% recorded in the first quarter of 2019.
Acquisitions/Divestitures: Over time, Danaher has been gaining from its inorganic measures, including disposals and buyouts. Notably, the company’s sales growth was boosted by 0.5% in the fourth quarter of 2019 and by 1% in 2019 on contributions from acquired assets.
Danaher acquired Integrated DNA Technologies in April 2018, Blue Software in July 2018, and added Labcyte Corporation to its portfolio in January 2019. Also, the company is due to acquire General Electric Company’s (GE - Free Report) Biopharma business. The deal is anticipated to close in the first quarter of 2020. The acquisition is expected to enhance Danaher’s biologics workflow solutions business and prove 45-50 cents per share accretive to earnings in the first year of the deal completion.
In addition to these buyouts, the company believes that the divestment of its dental business in 2019 will help in boosting shareholder value.
Rewards to Shareholders: Enhancing shareholders’ value through dividend payments is a priority for Danaher. The company disbursed $526.7 million as dividends, reflecting growth of 21.5% from the previous year.
It is worth mentioning here that Danaher announced a 6% increase in its quarterly dividend rate in March 2019. We believe that the healthy cash position will help the company in rewarding shareholders going forward.
Factors Working Against Danaher
Higher Costs and Expenses: In fourth-quarter 2019, the company’s cost of sales increased 4.5% year over year, and its operating expenses expanded 4.3% year over year. Similarly, it recorded a 5.1% increase in cost of sales and a 4.1% hike in operating expenses in 2019.
We believe that a hike in the cost of sales and operating expenses, if uncontrolled, can affect the company’s margins and profitability.
Forex Woes: International operations have exposed Danaher to risks stemming from geopolitical issues and unfavorable movements in foreign currencies. In fourth-quarter 2019, the adverse impacts of foreign currency movements lowered its sales by 1%.
We believe that the persistence of the headwind might be dragging for Danaher.
Debts and Other Concerns: High debts increase financial obligations and in turn, hurt profitability. Danaher’s long-term debts of $21.5 billion at the end of fourth-quarter 2019 reflect a sequential increase of 30.1% and a year-over-year hike of 122%.
It is worth mentioning that proceeds from borrowing (with maturities longer than 90 days) totaled $12.1 billion in 2019. However, repayments for such debts were just $1.6 billion in the year.
In addition, the company faces competition from other players, including 3M Company (MMM - Free Report) and United Technologies Corporation , belonging to the same industry.
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 2020.
Image: Bigstock
Danaher (DHR) Poised to Gain From Buyouts Despite Cost Woes
We issued an updated research report on Danaher Corporation (DHR - Free Report) on Mar 6.
The company is a global conglomerate that specializes in products and services meant for use in the professional, commercial, industrial and medical products. It is headquartered in Washington, DC.
Many tailwinds and headwinds are impacting Danaher’s performance. Let’s delve deeper.
Factors Favoring Danaher
Healthy Projections: For 2020, the company anticipates benefiting from solid commercial execution, product innovation and Danaher Business System (DBS) initiatives. Adjusted earnings in the year are anticipated to be $4.80-$4.90 per share, suggesting an increase from $4.42 reported in 2019.
Also, it believes that core sales in the first quarter of the year will grow 6-6.5%, suggesting growth from 5.5% recorded in the first quarter of 2019.
Acquisitions/Divestitures: Over time, Danaher has been gaining from its inorganic measures, including disposals and buyouts. Notably, the company’s sales growth was boosted by 0.5% in the fourth quarter of 2019 and by 1% in 2019 on contributions from acquired assets.
Danaher acquired Integrated DNA Technologies in April 2018, Blue Software in July 2018, and added Labcyte Corporation to its portfolio in January 2019. Also, the company is due to acquire General Electric Company’s (GE - Free Report) Biopharma business. The deal is anticipated to close in the first quarter of 2020. The acquisition is expected to enhance Danaher’s biologics workflow solutions business and prove 45-50 cents per share accretive to earnings in the first year of the deal completion.
In addition to these buyouts, the company believes that the divestment of its dental business in 2019 will help in boosting shareholder value.
Rewards to Shareholders: Enhancing shareholders’ value through dividend payments is a priority for Danaher. The company disbursed $526.7 million as dividends, reflecting growth of 21.5% from the previous year.
It is worth mentioning here that Danaher announced a 6% increase in its quarterly dividend rate in March 2019. We believe that the healthy cash position will help the company in rewarding shareholders going forward.
Factors Working Against Danaher
Higher Costs and Expenses: In fourth-quarter 2019, the company’s cost of sales increased 4.5% year over year, and its operating expenses expanded 4.3% year over year. Similarly, it recorded a 5.1% increase in cost of sales and a 4.1% hike in operating expenses in 2019.
We believe that a hike in the cost of sales and operating expenses, if uncontrolled, can affect the company’s margins and profitability.
Forex Woes: International operations have exposed Danaher to risks stemming from geopolitical issues and unfavorable movements in foreign currencies. In fourth-quarter 2019, the adverse impacts of foreign currency movements lowered its sales by 1%.
We believe that the persistence of the headwind might be dragging for Danaher.
Debts and Other Concerns: High debts increase financial obligations and in turn, hurt profitability. Danaher’s long-term debts of $21.5 billion at the end of fourth-quarter 2019 reflect a sequential increase of 30.1% and a year-over-year hike of 122%.
It is worth mentioning that proceeds from borrowing (with maturities longer than 90 days) totaled $12.1 billion in 2019. However, repayments for such debts were just $1.6 billion in the year.
In addition, the company faces competition from other players, including 3M Company (MMM - Free Report) and United Technologies Corporation , belonging to the same industry.
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 2020.
Click here for the 6 trades >>