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Why Is Danaher (DHR) Up 3.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Danaher (DHR - Free Report) . Shares have added about 3.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Danaher due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Danaher has reported better-than-expected results for the first quarter of 2020, with earnings surpassing estimates by 5%.
The company’s adjusted earnings were $1.05 per share in the reported quarter, which outpaced the Zacks Consensus Estimate of $1.00. The same also grew 6.1% from the year-ago quarter’s figure of 99 cents on sales growth.
Revenue Details
In the quarter under review, the company’s net sales were $4,343.1 million, which grew 2.9% from the year-ago quarter. Organic sales in the quarter grew 4.5%, partially offset by 1.5% adverse impact of foreign-currency translations. Notably, the organic performance was boosted by healthy growth in Radiometer, Cepheid, Pall and ChemTreat businesses.
However, the company’s top line lagged the Zacks Consensus Estimate of $4,382 million.
Effective third-quarter 2019, it started reporting net sales under three segments — Life Sciences, Diagnostics, and Environmental & Applied Solutions. The segmental information is briefly discussed below:
Revenues for the Life Sciences segment totaled $1,650.4 million, rising 1.5% year over year. Results were driven by 2.5% growth in core sales, partially offset by a 1% adverse impact of foreign-currency translations.
Revenues in the Diagnostics segment grossed $1,627 million, increasing 6% year over year. The improvement came on the back of an 8% rise in core sales, which was partially offset by a 2% negative impact of foreign-currency translations.
Revenues in the Environmental & Applied Solutions segment totaled $1,065.7 million, rising 1% year over year. The uptick can be attributed to 2.5% growth in core sales. However, foreign-currency translations had an adverse impact of 1.5%.
Margin Profile
In the quarter under review, Danaher’s cost of sales rose 1.9% year over year to $1,900.3 million. It represented 43.8% of net sales compared with 44.2% in the year-ago quarter. Gross profit increased by 3.7% year over year to $2,442.8 million, while margin rose 40 basis points (bps) year over year to 56.3%.
Selling, general and administrative expenses of $1,458.3 million reflect a year-over-year increase of 6.6%. As a percentage of net sales, it represented 33.6% versus 32.4% in the year-ago quarter. Research and development expenses were $287 million, which rose 7.3% year over year. It represented 6.6% of net sales versus 6.3% in the year-ago quarter.
Operating income in the quarter under review declined 3.1% year over year to $697.5 million. Operating margin decreased 100 bps to 16.1% in the quarter. The results were adversely impacted by a 5-bps adverse impact of acquisitions and 120-bps impact of miscellaneous sources, partially offset by 25-bps contribution from the core business.
Interest expenses more than doubled year over year to $47.4 million.
Balance Sheet and Cash Flow
Exiting the first quarter, Danaher had cash and cash equivalents of $4,367.7 million, down from $19,912.3 million at the end of the last reported quarter. Long-term debt balance rose 5.7% sequentially to $22,737.2 million.
During the quarter, the company raised $4,371.4 million through borrowings, with maturity of more than 90 days.
In the quarter, it generated net cash of $819 million from operating activities, increasing 16.5% from the previous-year quarter. Capital used for purchasing property, plant and equipment totaled $132.5 million versus $140.1 million in the previous year.
Free cash flow in the quarter improved 21% year over year to $694 million.
In the quarter, the company paid out dividends worth $138.1 million to its shareholders.
Outlook
In the quarters ahead, Danaher expects to benefit from solid product portfolio, operational efficiency and dedicated workforce.
For the second quarter of 2020, the company expects core revenues to be down 10% to flat year over year. The projection includes positive contribution of 2% from Cytiva.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -13.53% due to these changes.
VGM Scores
At this time, Danaher has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Danaher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Danaher (DHR) Up 3.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Danaher (DHR - Free Report) . Shares have added about 3.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Danaher due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Danaher Beats Q1 Earnings Estimates, Provides Bleak View
Danaher has reported better-than-expected results for the first quarter of 2020, with earnings surpassing estimates by 5%.
The company’s adjusted earnings were $1.05 per share in the reported quarter, which outpaced the Zacks Consensus Estimate of $1.00. The same also grew 6.1% from the year-ago quarter’s figure of 99 cents on sales growth.
Revenue Details
In the quarter under review, the company’s net sales were $4,343.1 million, which grew 2.9% from the year-ago quarter. Organic sales in the quarter grew 4.5%, partially offset by 1.5% adverse impact of foreign-currency translations. Notably, the organic performance was boosted by healthy growth in Radiometer, Cepheid, Pall and ChemTreat businesses.
However, the company’s top line lagged the Zacks Consensus Estimate of $4,382 million.
Effective third-quarter 2019, it started reporting net sales under three segments — Life Sciences, Diagnostics, and Environmental & Applied Solutions. The segmental information is briefly discussed below:
Revenues for the Life Sciences segment totaled $1,650.4 million, rising 1.5% year over year. Results were driven by 2.5% growth in core sales, partially offset by a 1% adverse impact of foreign-currency translations.
Revenues in the Diagnostics segment grossed $1,627 million, increasing 6% year over year. The improvement came on the back of an 8% rise in core sales, which was partially offset by a 2% negative impact of foreign-currency translations.
Revenues in the Environmental & Applied Solutions segment totaled $1,065.7 million, rising 1% year over year. The uptick can be attributed to 2.5% growth in core sales. However, foreign-currency translations had an adverse impact of 1.5%.
Margin Profile
In the quarter under review, Danaher’s cost of sales rose 1.9% year over year to $1,900.3 million. It represented 43.8% of net sales compared with 44.2% in the year-ago quarter. Gross profit increased by 3.7% year over year to $2,442.8 million, while margin rose 40 basis points (bps) year over year to 56.3%.
Selling, general and administrative expenses of $1,458.3 million reflect a year-over-year increase of 6.6%. As a percentage of net sales, it represented 33.6% versus 32.4% in the year-ago quarter. Research and development expenses were $287 million, which rose 7.3% year over year. It represented 6.6% of net sales versus 6.3% in the year-ago quarter.
Operating income in the quarter under review declined 3.1% year over year to $697.5 million. Operating margin decreased 100 bps to 16.1% in the quarter. The results were adversely impacted by a 5-bps adverse impact of acquisitions and 120-bps impact of miscellaneous sources, partially offset by 25-bps contribution from the core business.
Interest expenses more than doubled year over year to $47.4 million.
Balance Sheet and Cash Flow
Exiting the first quarter, Danaher had cash and cash equivalents of $4,367.7 million, down from $19,912.3 million at the end of the last reported quarter. Long-term debt balance rose 5.7% sequentially to $22,737.2 million.
During the quarter, the company raised $4,371.4 million through borrowings, with maturity of more than 90 days.
In the quarter, it generated net cash of $819 million from operating activities, increasing 16.5% from the previous-year quarter. Capital used for purchasing property, plant and equipment totaled $132.5 million versus $140.1 million in the previous year.
Free cash flow in the quarter improved 21% year over year to $694 million.
In the quarter, the company paid out dividends worth $138.1 million to its shareholders.
Outlook
In the quarters ahead, Danaher expects to benefit from solid product portfolio, operational efficiency and dedicated workforce.
For the second quarter of 2020, the company expects core revenues to be down 10% to flat year over year. The projection includes positive contribution of 2% from Cytiva.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -13.53% due to these changes.
VGM Scores
At this time, Danaher has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Danaher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.