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!
Disclaimer: Â The author did not hold a positionÂ in Danaher Corporation (DHR)Â orÂ 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. Â Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.