Acquired Assets Aid Danaher (DHR) Despite Rise In Costs
Zacks Investment Research | Nov 18, 2019 10:36PM ET
We issued an updated research report on Danaher Corporation (NYSE:DHR) on Nov 18.
The company, with a market capitalization of $102.7 billion, currently carries a Zacks Rank #3 (Hold).
Many tailwinds and headwinds are impacting its performance. Let’s delve deeper.
Factors Favoring Danaher
Solid Product Portfolio: The conglomerate is engaged in designing, manufacturing and marketing of diverse lines of professional, medical, industrial, commercial and consumer products. Solid demand for its products, mainly in developed and high-growth markets, favorably impacted the third-quarter 2019 results.
In the quarters ahead, solid product demand (including DxH 900 analyzer, Esko, X-Rite, ChemTreat and others) will likely bolster Danaher's segmental sales. For the fourth quarter of 2019, the company predicts year-over-year core sales growth of 4.5%.
Shareholder-Friendly Policies: Danaher remains committed to rewarding shareholders handsomely through dividend payments. During the first nine months of 2019, it distributed dividends worth $385 million, up from $321.2 million distributed in the year-ago period.
Notably, the company hiked its quarterly dividend payout by 6% in March 2019.
Inorganic Actions: Danaher has been strengthening the portfolio through acquisitions and divestments. In April 2018, it acquired Integrated DNA Technologies and added Blue Software to its portfolio in July 2018. In January 2019, Danaher enhanced automation capabilities with the acquisition of Labcyte Corporation.
In addition, the company is working toward acquiring General Electric Company's (NYSE:GE) BioPharma business. Danaher anticipates earnings accretion of 45-50 cents per share from the buyout in the first year of the completion of the deal (in the first quarter of 2020). Also, Danaher divested its dental business to an independent publicly-trading company, Envista Holdings Corporation (NVST), in September 2019. The move is expected to work in the best interest of Danaher’s shareholders.
Danaher holds Envista’s 80.6% stake, which it is planning to dispose of.
Factors Working Against Danaher
Share Price Performance and Over-Valued Stock: Market sentiments seem to be working against the stock, as evident from Danaher’s shares’ underperformance compared with the industry. In the past three months, the company’s shares have gained 0.1% compared with the Zacks Investment Research
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