Here's Why You Should Buy Danaher (DHR) Stock Right Now
Multi-sector stocks in the equity market have been gaining strength, of late, on the back of escalating demand for air travel, technological upgrade in manufacturing processes, as well as improving operations in the oil and gas industry. Going forward, reduced corporate-tax rates, steaming-up industrial activity in the United States, and increased government spending will likely continue to benefit these companies.
Such multi-sector stocks are grouped under the Zacks Conglomerates sector t hat currently occupies the first position among the 16 Zacks sectors.
Earnings for the sector are anticipated to be up 2% year over year in 2018, aided by around 4% annualized top-line increment.
Among the numerous potential gainers within the sector, adding Danaher Corporation DHR to your portfolio will be a promising investment move at the moment. This stock currently carries a Zacks Rank #2 (Buy).
Price Performance
The above graph shows that over the past three months, Danaher’s stock has rallied 8.5%, outperforming 7% and 4.6% growth recorded by the sector and the benchmark S&P 500 Group, respectively. Notably, the stock has significantly outpaced its own industry that has recorded a growth of 7% in the past three-month period.
Why to Grab the Stock?
Unique DBS Implementation: Danaher has been steadily enhancing its operational excellence on the back of the Danaher Business System (DBS) implementation. Quality, cost, innovation and delivery are the four major pillars of this program.
Through greater operational efficacy (especially in the Life sciences and Diagnostics platforms), the company intends to boost its free cash flow over time. Danaher plans to finance new capital-deployment programs in the second half of 2018 with solid free cash flow generation.
Top-Line Prospects: Danaher generated better-than-expected revenues in second-quarter 2018. Top-line revenues climbed 6% year over year on an organic basis. This upside primarily stemmed from strong demand for the company's innovative products. In the quarters ahead, elevated demand for popular products line, such as DxH 520 analyzer, BOND RX Advanced Stainer and PELORIS III Tissue Processing System will likely continue to bolster Danaher's segmental sales. The company currently anticipates securing organic revenue growth of 4-4.5% in the third quarter and predicts to achieve mid-single digit core growth in 2018.
Per our estimates, the company’s year-over-year revenue growth is currently pegged at 8.1% and 4% for 2018 and 2019, respectively.
Profitability: Danaher pulled off an average positive earnings surprise of 4.95% over the trailing four quarters. Solid core revenue growth and benefits secured from effective implementation of the DBS will likely continue to drive the company’s bottom-line performances in the quarters ahead. Notably, Danaher currently anticipates reporting adjusted earnings of $4.43-$4.50 per share in 2018, higher than the prior view of $4.38-$4.45 per share.
Per our estimates, the company’s year-over-year earnings growth is currently pinned at 11.4% and 7.8% for 2018 and 2019, respectively.
Inorganic Stance: Danaher is steadily boosting its competency on the back of strategic inorganic moves. For instance, the acquisition of Integrated DNA Technologies (inked in March 2018) is expected to strengthen the company's Life Sciences business segment, moving ahead. On the other hand, divestiture of dental business into an independent publicly-trading company is anticipated to the company's profitability in the quarters ahead.
Other Key Picks
Some other top-ranked stocks in the same space are listed below:
Federal Signal Corporation FSS sports a Zacks Rank of 1 (Strong Buy). The company pulled off an average positive earnings surprise of 22.48% over the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Macquarie Infrastructure Company MIC also carries a Zacks Rank of 1. The company delivered an average positive earnings surprise of 8.05% over the trailing four quarters.
Crane Company CR carries a Zacks Rank of 2. The company generated an average positive earnings surprise of 3.03% during the same time frame.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Federal Signal Corporation (FSS) : Free Stock Analysis Report
Danaher Corporation (DHR) : Free Stock Analysis Report
Macquarie Infrastructure Company (MIC) : Free Stock Analysis Report
Crane Company (CR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
