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Danaher Corporation Just Beat EPS By 5.2%: Here's What Analysts Think Will Happen Next

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Simply Wall St
·3 min read
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As you might know, Danaher Corporation (NYSE:DHR) recently reported its yearly numbers. The result was positive overall - although revenues of US$22b were in line with what the analysts predicted, Danaher surprised by delivering a statutory profit of US$4.89 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Danaher

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Danaher's 16 analysts is for revenues of US$25.9b in 2021, which would reflect a meaningful 16% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 23% to US$6.10. In the lead-up to this report, the analysts had been modelling revenues of US$25.3b and earnings per share (EPS) of US$5.41 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a decent improvement in earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$258, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Danaher at US$284 per share, while the most bearish prices it at US$138. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Danaher's rate of growth is expected to accelerate meaningfully, with the forecast 16% revenue growth noticeably faster than its historical growth of 4.9%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.4% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Danaher is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Danaher following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Danaher. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Danaher analysts - going out to 2025, and you can see them free on our platform here.

Even so, be aware that Danaher is showing 2 warning signs in our investment analysis , you should know about...

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.