Danaher Corp Valuation – March 2019 #DHR

Company Profile (excerpt from Reuters): Danaher Corporation (Danaher), incorporated on October 3, 1986, designs, manufactures and markets professional, medical, industrial and commercial products and services. As of December 31, 2016, the Company’s research and development, manufacturing, sales, distribution, service and administrative facilities were located in over 60 countries. Danaher operates through four segments: Life Sciences; Diagnostics; Dental, and Environmental & Applied Solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DHR – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $91,024,671,224 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.47 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 29.20% Fail
6. Moderate PEmg Ratio PEmg < 20 31.87 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.22 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.30 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.01
MG Growth Estimate 0.16%
MG Value $35.34
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $58.09
MG Value based on 0% Growth $34.05
Market Implied Growth Rate 11.69%
Current Price $127.68
% of Intrinsic Value 361.24%

Danaher Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.96 in 2015 to an estimated $4.01 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.69% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Danaher Corporation revealed the company was trading above its Graham Number of $63.81. The company pays a dividend of $0.64 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was 31.87, which was below the industry average of 53.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-17.6.

Danaher Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$17.60
Graham Number $63.81
PEmg 31.87
Current Ratio 1.47
PB Ratio 3.22
Current Dividend $0.64
Dividend Yield 0.50%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $7,093,800,000
Total Current Liabilities $4,841,500,000
Long-Term Debt $9,688,500,000
Total Assets $47,832,500,000
Intangible Assets $37,579,100,000
Total Liabilities $19,605,800,000
Shares Outstanding (Diluted Average) 711,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.50
Dec2018 $3.74
Dec2017 $3.53
Dec2016 $3.65
Dec2015 $4.74
Dec2014 $3.63
Dec2013 $3.80
Dec2012 $3.36
Dec2011 $3.11
Dec2010 $2.64
Dec2009 $1.73
Dec2008 $1.98
Dec2007 $2.10
Dec2006 $1.74
Dec2005 $1.38
Dec2004 $1.15
Dec2003 $0.84
Dec2002 $0.47
Dec2001 $0.50
Dec2000 $0.56
Dec1999 $0.45

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.01
Dec2018 $3.79
Dec2017 $3.84
Dec2016 $3.94
Dec2015 $3.96
Dec2014 $3.49
Dec2013 $3.25
Dec2012 $2.84
Dec2011 $2.49
Dec2010 $2.13
Dec2009 $1.85
Dec2008 $1.83
Dec2007 $1.65
Dec2006 $1.32
Dec2005 $1.03
Dec2004 $0.81
Dec2003 $0.61

Recommended Reading:

Other ModernGraham posts about the company

Danaher Corp Valuation – May 2018 $DHR
Danaher Corporation Valuation – February 2017 $DHR
Danaher Corporation Valuation – November 2015 Update $DHR
Danaher Corporation Analysis – August 2015 Update $DHR
47 Companies in the Spotlight This Week – 5/16/15

Other ModernGraham posts about related companies

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Cooper Companies Inc Valuation – March 2019 #COO
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Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT
Becton Dickinson and Co Valuation – February 2019 $BDX
IQVIA Holdings Inc Valuation – February 2019 $IQV

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Danaher Corp Valuation – May 2018 $DHR

Company Profile (excerpt from Reuters): Danaher Corporation (Danaher), incorporated on October 3, 1986, designs, manufactures and markets professional, medical, industrial and commercial products and services. As of December 31, 2016, the Company’s research and development, manufacturing, sales, distribution, service and administrative facilities were located in over 60 countries. Danaher operates through four segments: Life Sciences; Diagnostics; Dental, and Environmental & Applied Solutions.

DHR Chart

DHR data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DHR – May 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $70,156,291,566 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.59 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 54.81% Pass
6. Moderate PEmg Ratio PEmg < 20 25.28 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.65 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.59 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.96 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.01
MG Growth Estimate 2.26%
MG Value $52.26
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $58.17
MG Value based on 0% Growth $34.10
Market Implied Growth Rate 8.39%
Current Price $101.41
% of Intrinsic Value 194.04%

Danaher Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.49 in 2014 to an estimated $4.01 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.39% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Danaher Corporation revealed the company was trading above its Graham Number of $61.2. The company pays a dividend of $0.56 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 25.28, which was below the industry average of 42.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-18.14.

Danaher Corporation receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.14
Graham Number $61.20
PEmg 25.28
Current Ratio 1.59
PB Ratio 2.65
Current Dividend $0.56
Dividend Yield 0.55%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $7,075,100,000
Total Current Liabilities $4,442,900,000
Long-Term Debt $10,410,700,000
Total Assets $47,145,200,000
Intangible Assets $37,018,900,000
Total Liabilities $19,943,400,000
Shares Outstanding (Diluted Average) 709,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.40
Dec2017 $3.53
Dec2016 $3.65
Dec2015 $4.74
Dec2014 $3.63
Dec2013 $3.80
Dec2012 $3.36
Dec2011 $3.11
Dec2010 $2.64
Dec2009 $1.73
Dec2008 $1.98
Dec2007 $2.10
Dec2006 $1.74
Dec2005 $1.38
Dec2004 $1.15
Dec2003 $0.84
Dec2002 $0.47
Dec2001 $0.50
Dec2000 $0.56
Dec1999 $0.45
Dec1998 $0.33

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.01
Dec2017 $3.84
Dec2016 $3.94
Dec2015 $3.96
Dec2014 $3.49
Dec2013 $3.25
Dec2012 $2.84
Dec2011 $2.49
Dec2010 $2.13
Dec2009 $1.85
Dec2008 $1.83
Dec2007 $1.65
Dec2006 $1.32
Dec2005 $1.03
Dec2004 $0.81
Dec2003 $0.61
Dec2002 $0.48

Recommended Reading:

Other ModernGraham posts about the company

Danaher Corporation Valuation – February 2017 $DHR
Danaher Corporation Valuation – November 2015 Update $DHR
Danaher Corporation Analysis – August 2015 Update $DHR
47 Companies in the Spotlight This Week – 5/16/15
Danaher Corporation Quarterly Valuation – May 2015 $DHR

Other ModernGraham posts about related companies

Cooper Companies Inc Valuation – May 2018 $COO
Edwards Lifesciences Corp Valuation – May 2018 $EW
Baxter International Inc Valuation – May 2018 $BAX
Boston Scientific Corp Valuation – May 2018 $BSX
Centene Corp Valuation – May 2018 $CNC
Abbott Laboratories Valuation – May 2018 $ABT
Becton Dickinson and Co Valuation – May 2018 $BDX
IQVIA Holdings Inc Valuation – Initial Coverage May 2018 $IQV
Thermo Fisher Scientific Inc Valuation – April 2018 $TMO
Illumina Inc Valuation – April 2018 $ILMN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Danaher Corporation Valuation – February 2017 $DHR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Danaher Corporation (DHR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Danaher Corporation designs, manufactures and markets professional, medical, industrial and commercial products and services. The Company operates in five segments: Test & Measurement; Environmental; Life Sciences & Diagnostics; Dental, and Industrial Technologies. The Test & Measurement segment offers products, software and services. Its Environmental segment products and services help protect the water supply, enhance the safety of personal data and improve business efficiencies. In the Life Sciences & Diagnostics segment, its diagnostics business offers analytical instruments, reagents, consumables, software and services. Its life sciences business offers research tools. Its Dental segment provides products that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone. Its Industrial Technologies segment solutions help protect the world’s food supply, improve packaging design and quality, and verify pharmaceutical dosages.

DHR Chart

DHR data by YCharts

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Downloadable PDF version of this valuation:

ModernGraham Valuation of DHR – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $59,773,425,429 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.97 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 93.54% Pass
6. Moderate PEmg Ratio PEmg < 20 21.76 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.62 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.97 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -46.31 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $3.96
MG Growth Estimate 3.24%
MG Value $59.28
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $57.35
MG Value based on 0% Growth $33.62
Market Implied Growth Rate 6.63%
Current Price $86.08
% of Intrinsic Value 145.20%

Danaher Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.25 in 2013 to an estimated $3.96 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.63% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Danaher Corporation revealed the company was trading above its Graham Number of $53.93. The company pays a dividend of $0.57 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 21.76, which was below the industry average of 32.29, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.33.

Danaher Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.33
Graham Number $53.93
PEmg 21.76
Current Ratio 0.97
PB Ratio 2.62
Current Dividend $0.57
Dividend Yield 0.66%
Number of Consecutive Years of Dividend Growth 4

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $6,665,100,000
Total Current Liabilities $6,874,000,000
Long-Term Debt $9,674,200,000
Total Assets $45,295,300,000
Intangible Assets $35,644,900,000
Total Liabilities $22,292,500,000
Shares Outstanding (Diluted Average) 699,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.89
Dec2016 $3.65
Dec2015 $4.74
Dec2014 $3.63
Dec2013 $3.80
Dec2012 $3.36
Dec2011 $3.11
Dec2010 $2.64
Dec2009 $1.73
Dec2008 $1.98
Dec2007 $2.10
Dec2006 $1.74
Dec2005 $1.38
Dec2004 $1.15
Dec2003 $0.84
Dec2002 $0.47
Dec2001 $0.50
Dec2000 $0.56
Dec1999 $0.45
Dec1998 $0.33
Dec1997 $0.32

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.96
Dec2016 $3.94
Dec2015 $3.96
Dec2014 $3.49
Dec2013 $3.25
Dec2012 $2.84
Dec2011 $2.49
Dec2010 $2.13
Dec2009 $1.85
Dec2008 $1.83
Dec2007 $1.65
Dec2006 $1.32
Dec2005 $1.03
Dec2004 $0.81
Dec2003 $0.61
Dec2002 $0.48
Dec2001 $0.47

Recommended Reading:

Other ModernGraham posts about the company

Danaher Corporation Valuation – November 2015 Update $DHR
Danaher Corporation Analysis – August 2015 Update $DHR
47 Companies in the Spotlight This Week – 5/16/15
Danaher Corporation Quarterly Valuation – May 2015 $DHR
40 Companies in the Spotlight This Week – 2/21/15

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Agilent Technologies Inc Valuation – February 2017 $A
Cooper Companies Inc Valuation – Initial Coverage $COO
Edwards Lifesciences Corp Valuation – January 2017 $EW
Baxter International Inc Valuation – January 2017 $BAX
CONMED Corporation Valuation – Initial Coverage $CNMD
Boston Scientific Corp Valuation – January 2017 $BSX

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Danaher Corporation Valuation – November 2015 Update $DHR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – October 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Danaher Corporation (DHR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Danaher Corporation (Danaher) designs, manufactures and markets professional, medical, industrial and commercial products and services. It operates in five segments: Test & Measurement; Environmental; Life Sciences & Diagnostics; Dental, and Industrial Technologies. The Test & Measurement segment offers test, measurement and monitoring products. The Environmental segment products and services help protect the global water supply, facilitate environmental stewardship and enhance the safety of personal data. The Company’s diagnostics business offers analytical instruments, reagents, consumables, software and services. The Dental segment provides products that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone. The Company’s Industrial Technologies solutions help protect the world’s food supply, improve packaging design and quality, verify pharmaceutical dosages and authenticity and power innovative machines.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of DHR – November 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $65,150,073,642 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.04 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 113.43% Pass
6. Moderate PEmg Ratio PEmg < 20 23.53 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.87 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.04 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 37.63 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

DHR value Chart November 2015

EPSmg $4.04
MG Growth Estimate 9.34%
MG Value $109.81
Opinion Fairly Valued
MG Value based on 3% Growth $58.58
MG Value based on 0% Growth $34.34
Market Implied Growth Rate 7.52%
Current Price $95.07
% of Intrinsic Value 86.58%

Danaher Corporation does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.49 in 2011 to an estimated $4.04 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 7.52% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Danaher Corporation (DHR)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

DHR Charts November 2015

Net Current Asset Value (NCAV) -$25.28
Graham Number $61.42
PEmg 23.53
Current Ratio 1.04
PB Ratio 2.87
Dividend Yield 0.53%
Number of Consecutive Years of Dividend Growth 2

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $8,931,800,000
Total Current Liabilities $8,625,600,000
Long-Term Debt $11,522,700,000
Total Assets $49,707,900,000
Intangible Assets $36,819,200,000
Total Liabilities $26,595,200,000
Shares Outstanding (Diluted Average) 698,700,000

Earnings Per Share History

Next Fiscal Year Estimate $4.97
Dec14 $3.63
Dec13 $3.80
Dec12 $3.36
Dec11 $3.11
Dec10 $2.64
Dec09 $1.73
Dec08 $1.98
Dec07 $2.10
Dec06 $1.74
Dec05 $1.38
Dec04 $1.15
Dec03 $0.84
Dec02 $0.47
Dec01 $0.50
Dec00 $0.56
Dec99 $0.45
Dec98 $0.33
Dec97 $0.32
Dec96 $0.43
Dec95 $0.23

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.04
Dec14 $3.49
Dec13 $3.25
Dec12 $2.84
Dec11 $2.49
Dec10 $2.13
Dec09 $1.85
Dec08 $1.83
Dec07 $1.65
Dec06 $1.32
Dec05 $1.03
Dec04 $0.81
Dec03 $0.61
Dec02 $0.48
Dec01 $0.47
Dec00 $0.44
Dec99 $0.37

Recommended Reading:

Other ModernGraham posts about the company

Danaher Corporation Analysis – August 2015 Update $DHR
47 Companies in the Spotlight This Week – 5/16/15
Danaher Corporation Quarterly Valuation – May 2015 $DHR
40 Companies in the Spotlight This Week – 2/21/15
Danaher Corporation Quarterly Valuation – February 2015 $DHR

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Danaher Corporation Analysis – August 2015 Update $DHR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – July 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Danaher Corporation (DHR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Danaher Corporation (Danaher) designs, manufactures and markets professional, medical, industrial and commercial products and services. It operates in five segments: Test & Measurement; Environmental; Life Sciences & Diagnostics; Dental, and Industrial Technologies. The Test & Measurement segment offers test, measurement and monitoring products. The Environmental segment products and services help protect the global water supply, facilitate environmental stewardship and enhance the safety of personal data. The Company’s diagnostics business offers analytical instruments, reagents, consumables, software and services. The Dental segment provides products that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone. The Company’s Industrial Technologies solutions help protect the world’s food supply, improve packaging design and quality, verify pharmaceutical dosages and authenticity and power innovative machines.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of DHR – August 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
6. Moderate PEmg Ratio PEmg < 20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg 3.62
MG Growth Estimate 6.79%
MG Value $79.86
Opinion Overvalued
MG Value based on 3% Growth $52.44
MG Value based on 0% Growth $30.74
Market Implied Growth Rate 8.24%
Current Price $90.36
% of Intrinsic Value 113.15%

Danaher Corporation qualifies for the Enterprising Investor but is not suitable for the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio as well as the high PEmg and PB ratios.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.49 in 2011 to an estimated $3.62 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 8.24% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Danaher Corporation (DHR)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

DHR charts August 2015

 

 

Useful Links:

Net Current Asset Value (NCAV) -$4.49
PEmg 24.98
Current Ratio 1.91
PB Ratio 2.70
Dividend Yield 0.52%
Number of Consecutive Years of Dividend Growth 2

Most Recent Balance Sheet Figures

Total Current Assets $9,654,500,000
Total Current Liabilities $5,055,600,000
Long-Term Debt $3,052,700,000
Total Assets $36,986,800,000
Intangible Assets $24,032,400,000
Total Liabilities $12,885,600,000
Outstanding Shares 719,600,000

Earnings Per Share History

Next Fiscal Year Estimate $3.70
Dec14 $3.63
Dec13 $3.80
Dec12 $3.36
Dec11 $3.11
Dec10 $2.64
Dec09 $1.73
Dec08 $1.98
Dec07 $2.10
Dec06 $1.74
Dec05 $1.38
Dec04 $1.15
Dec03 $0.84
Dec02 $0.47
Dec01 $0.50
Dec00 $0.56
Dec99 $0.45
Dec98 $0.33
Dec97 $0.32
Dec96 $0.43
Dec95 $0.23

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.62
Dec14 $3.49
Dec13 $3.25
Dec12 $2.84
Dec11 $2.49
Dec10 $2.13
Dec09 $1.85
Dec08 $1.83
Dec07 $1.65
Dec06 $1.32
Dec05 $1.03
Dec04 $0.81
Dec03 $0.61
Dec02 $0.48
Dec01 $0.47
Dec00 $0.44
Dec99 $0.37

Recommended Reading:

Other ModernGraham posts about the company

47 Companies in the Spotlight This Week – 5/16/15
Danaher Corporation Quarterly Valuation – May 2015 $DHR
40 Companies in the Spotlight This Week – 2/21/15
Danaher Corporation Quarterly Valuation – February 2015 $DHR
26 Companies in the Spotlight This Week – 11/22/14

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Caterpillar Inc. Analysis – 2015 Update $CAT
W.W. Grainger Inc. Analysis – July 2015 Update $GWW
Deere & Company Analysis – June 2015 Update $DE
Regal-Beloit Corporation Analysis – 2015 Update $RBC
Parker Hannifin Corporation Analysis – June 2015 Update $PH

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

Danaher Corporation Quarterly Valuation – May 2015 $DHR

Danaher_Corporation_logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – April 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Danaher Corporation (DHR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Danaher Corporation (Danaher) designs, manufactures and markets professional, medical, industrial and commercial products and services. Its research and development, manufacturing, sales, distribution, service and administrative facilities are located in more than 50 countries. It operates in five segments: Test & Measurement; Environmental; Life Sciences & Diagnostics; Dental and Industrial Technologies. Test & Measurement is a provider of electronic measurement instruments, professional test tools, thermal imaging and calibration equipment. Environmental serves two markets: water quality and retail or commercial petroleum. Diagnostics businesses offer a range of analytical instruments, reagents, consumables, software and services. Dental is a provider of a range of consumables, equipment and services for the dental market. Industrial Technologies designs and manufactures components and systems that are incorporated by original equipment manufacturers and systems integrators.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $87.35
MG Value $91.76
MG Opinion Fairly Valued
Value Based on 3% Growth $55.00
Value Based on 0% Growth $32.24
Market Implied Growth Rate 7.26%
Net Current Asset Value (NCAV) -$5.53
PEmg 23.03
Current Ratio 1.77
PB Ratio 2.69

Balance Sheet – March 2015

Current Assets $8,774,000,000
Current Liabilities $4,953,000,000
Total Debt $3,054,000,000
Total Assets $36,072,000,000
Intangible Assets $24,070,000,000
Total Liabilities $12,751,000,000
Outstanding Shares 718,700,000

Earnings Per Share

2015 (estimate) $4.23
2014 $3.63
2013 $3.80
2012 $3.36
2011 $3.11
2010 $2.64
2009 $1.73
2008 $1.98
2007 $2.10
2006 $1.74
2005 $1.38

Earnings Per Share – ModernGraham

2015 (estimate) $3.79
2014 $3.49
2013 $3.25
2012 $2.84
2011 $2.49
2010 $2.13

Dividend History

Conclusion:

Danaher Corporation is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, and the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.49 in 2011 to an estimated $3.79 for 2015.  This level of demonstrated growth supports the market’s implied estimate of 7.26% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value falling within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Danaher Corporation (DHR)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Danaher Corporation Quarterly Valuation – February 2015 $DHR

Danaher_Corporation_logo

Danaher Corporation should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the low current ratio and the high PEmg and PB ratios, while the Enterprising Investor has no initial concerns. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $2.13 in 2010 to $3.49 for 2014. This is a strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 8.2% over the next 7-10 years. The ModernGraham valuation model, therefore, returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.

Be sure to check out previous ModernGraham valuations of Danaher Corporation (DHR) for greater perspective!

Read the full valuation on Seeking Alpha!

DHR Chart

DHR data by YCharts

Disclaimer:  The author did not hold a position in Danaher Corporation (DHR) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Danaher Corporation Quarterly Valuation – November 2014 $DHR

Danaher_Corporation_logo

After reviewing the data, Danaher should satisfy both the Defensive Investor and the Enterprising Investor. The Defensive Investor’s only initial concern is the high PEmg ratio, while the Enterprising Investor has no concerns at this first stage in the analysis. Therefore, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $2.13 in 2010 to an estimated $3.48 for 2014. This is a fairly strong level of demonstrated growth which is in line with the market’s implied estimate for earnings growth of 7.6% over the next 7-10 years. The ModernGraham valuation model therefore returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.

Be sure to check out previous ModernGraham valuations of Danaher Corporation for more perspective!

Read the full valuation on Seeking Alpha!

DHR Chart

DHR data by YCharts

Disclaimer:  The author did not hold a position in Danaher Corporation (DHR) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Danaher Corporation Quarterly Valuation – August 2014 $DHR

Danaher_Corporation_logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Defensive Investor Near 52 Week Lows.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Danaher Corporation (DHR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Danaher Corporation (Danaher) designs, manufactures and markets professional, medical, industrial and commercial products and services. The Company’s research and development, manufacturing, sales, distribution, service and administrative facilities are located in more than 50 countries. It operates in five segments: Test & Measurement; Environmental; Life Sciences & Diagnostics; Dental; and Industrial Technologies. In April 2011, the Company sold its Pacific Scientific Aerospace (PSA) business. On June 30, 2011, the Company acquired Beckman Coulter, Inc. (Beckman Coulter). In January 2012, the Company sold its Accu-Sort businesses. In February 2012, the Company sold its Kollmorgen Electro-Optical (KEO) business. In January 2013, the Company acquired Navman Wireless. Effective August 2, 2013, Danaher Corp acquired Teletrac Inc, a developer of transportation software, from Vector Capital.
DHR Chart

DHR data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $74.87
MG Value $94.86
MG Opinion Fairly Valued
Value Based on 3% Growth $49.74
Value Based on 0% Growth $29.16
Market Implied Growth Rate 6.66%
Net Current Asset Value (NCAV) -$3.07
PEmg 21.83
Current Ratio 2.16
PB Ratio 2.49

Balance Sheet – 6/27/2014

Current Assets $9,507,300,000
Current Liabilities $4,406,700,000
Total Debt $3,020,000,000
Total Assets $35,652,100,000
Intangible Assets $22,767,500,000
Total Liabilities $11,931,600,000
Outstanding Shares 788,400,000

Earnings Per Share

2014 (estimate) $3.68
2013 $3.80
2012 $3.23
2011 $2.77
2010 $2.62
2009 $1.73
2008 $1.98
2007 $1.86
2006 $1.72
2005 $1.37
2004 $1.15

Earnings Per Share – ModernGraham

2014 (estimate) $3.43
2013 $3.15
2012 $2.70
2011 $2.36
2010 $2.09
2009 $1.80

Dividend  History
DHR Dividend Chart

DHR Dividend data by YCharts

Conclusion:

Danaher Corporation is suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor’s only initial concern with the company is the high PEmg ratio, while the Enterprising Investor has no initial concerns.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with research into the company and comparing it to other opportunities through a review of ModernGraham’s valuation of Thermo Fisher Scientific (TMO).  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.09 in 2010 to an estimated $3.43 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 6.66% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

Be sure to check out the previous ModernGraham valuations of Danaher Corporation (DHR) for more perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Danaher Corporation (DHR)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Danaher Corporation (DHR) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Danaher Corporation (DHR) Quarterly Valuation – May 2014

Danaher_Corporation_logoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing 5 Undervalued Companies for the Defensive Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Danaher Corporation (DHR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Danaher Corporation (Danaher) designs, manufactures and markets professional, medical, industrial and commercial products and services. The Company’s research and development, manufacturing, sales, distribution, service and administrative facilities are located in more than 50 countries. It operates in five segments: Test & Measurement; Environmental; Life Sciences & Diagnostics; Dental; and Industrial Technologies. In April 2011, the Company sold its Pacific Scientific Aerospace (PSA) business. On June 30, 2011, the Company acquired Beckman Coulter, Inc. (Beckman Coulter). In January 2012, the Company sold its Accu-Sort businesses. In February 2012, the Company sold its Kollmorgen Electro-Optical (KEO) business. In January 2013, the Company acquired Navman Wireless. Effective August 2, 2013, Danaher Corp acquired Teletrac Inc, a developer of transportation software, from Vector Capital.
DHR Chart

DHR data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $73.27
MG Value $95.37
MG Opinion Fairly Valued
Value Based on 3% Growth $49.83
Value Based on 0% Growth $29.21
Market Implied Growth Rate 6.41%
Net Current Asset Value (NCAV) -$3.40
PEmg 21.32
Current Ratio 2.18
PB Ratio 2.51

Balance Sheet – 3/28/2014

Current Assets $9,404,300,000
Current Liabilities $4,304,400,000
Total Debt $3,422,900,000
Total Assets $35,042,600,000
Intangible Assets $22,360,900,000
Total Liabilities $12,080,900,000
Outstanding Shares 787,400,000

Earnings Per Share

2014 (estimate) $3.70
2013 $3.80
2012 $3.23
2011 $2.77
2010 $2.62
2009 $1.73
2008 $1.98
2007 $1.86
2006 $1.72
2005 $1.37
2004 $1.15

Earnings Per Share – ModernGraham

2014 (estimate) $3.44
2013 $3.15
2012 $2.70
2011 $2.36
2010 $2.09
2009 $1.80

Dividend History
DHR Dividend Chart

DHR Dividend data by YCharts

Conclusion:

Danaher Corporation qualifies for the Enterprising Investor but not the Defensive Investor.  The company passes all of the requirements of the Enterprising Investor, but the PEmg and PB ratios are too high for Defensive Investors.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research into the company and comparing it to other opportunities through a review of Agilent Technologies (A) and 5 Undervalued Dow Components.  From a valuation perspective, the company appears fairly valued after growing its EPSmg (normalized earnings) from $2.09 in 2010 to an estimated $3.44 for 2014.  This is a strong level of demonstrated growth and is in line with the market’s implied estimate of 6.41% earnings growth, leading the ModernGraham valuation model to return an estimate of intrinsic value that falls within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Danaher Corporation (DHR)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Danaher Corporation (DHR) or in any other company mentioned in the article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

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