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Will Danaher (DHR) Keep Its Earnings Streak Alive in Q2?

Zacks Equity Research
·4 min read

Danaher Corporation DHR is set to release second-quarter 2020 results on Jul 23, before market open.

The company delivered impressive results in the last four quarters, surpassing estimates in all occasions. Earnings surprise for the period was 2.74%, on average. In the last reported quarter, the company’s earnings of $1.05 per share surpassed the Zacks Consensus Estimate of $1.00 by 5.00%.

In the past three months, the company’s shares have gained 20.7% compared with the industry’s growth of 15%.





Let us delve deeper.

Key Factors and Estimates for Q2

Danaher’s second-quarter results are expected to reflect the adverse impacts of the coronavirus outbreak on its operations — especially in North America and Western Europe. However, a dedicated workforce, solid product offerings and focus on improving operational efficiency might have aided the results.

Going by numbers, the company anticipates a change in core revenues in the second quarter to be (10%)-0% on a year-over-year basis. The impact of a 2% positive contribution from Cytiva is included in the projection. 

The Zack Consensus Estimate for second-quarter revenues of $4,963 million suggests a 3.8% decline from the year-ago reported figure. However, the quarterly revenues are estimated to increase 14.3% from the previous quarter. It is worth mentioning here that the company reported better-than-expected revenue results in two of the last four quarters, while lagged estimates in two. The sales surprise for the four quarters was 0.72%, on average.

For the Diagnostics segment, improved demand for molecular and acute care diagnostics-related products is anticipated to have favored results. However, setbacks might have been witnessed in consumables and instruments used primarily in hospital labs and reference labs.

The Zacks Consensus Estimate for the Diagnostics segment’s revenues for the second quarter is pegged at $1,533 million, reflecting a decline of 5.3% from the year-ago reported figure and a 5.8% fall from the sequential reported number. Though the segment’s prospects are concerning, its sales surprise of 1.70% for the last four quarters raises hope for better segmental results.

In addition, improved sales for automation, bioprocessing and genomic products are anticipated to have contributed to the Life Sciences segment. The consensus estimate for the segment is pegged at $2,496 million, suggesting a 45.7% year-over-year increase and 51.3% sequential growth. Its sales surprise for the last four quarters is 1.25%. Despite the healthy prospect, impacts of shutdown of laboratories (academic) and lower testing volumes in clinical laboratories are expected to have been dragging.

For the Environmental & Applied Solutions segment, improvement in sales of water testing and treatment consumable products as well as products related to coding and marking of consumer goods and medicines are expected to have boosted the company’s performance. On the contrary, delay in equipment purchase by the customers is anticipated to have ailed.

Earnings Whispers

Our proven model suggests an earnings beat for Danaher this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an earnings ESP of +4.85%, as the Most Accurate Estimate of $1.08 is above the Zacks Consensus Estimate of $1.03.

Danaher Corporation Price, Consensus and EPS Surprise

 

Danaher Corporation Price, Consensus and EPS Surprise
Danaher Corporation Price, Consensus and EPS Surprise

Danaher Corporation price-consensus-eps-surprise-chart | Danaher Corporation Quote

Zacks Rank: Danaher currently carries a Zacks Rank #2.

Other Stocks That Warrant a Look

Here are some other companies in the industry that you may want to consider as according to our model, these too have the right combination of elements to post an earnings beat this quarter:

Crane Co. CR currently has an Earnings ESP of +10.64% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carlisle Companies Incorporated CSL presently has an Earnings ESP of +3.06% and a Zacks Rank #3.

3M Company MMM currently has an Earnings ESP of +2.62% and a Zacks Rank #3.

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