Will Diagnostic Unit Weakness Mar Danaher's (DHR) Q3 Earnings?
Danaher Corporation DHR is scheduled to release third-quarter 2023 results on Oct 24, before market open.
The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 9.5%.
Let’s see how things have shaped up for Danaher this earnings season.
Danaher Corporation Price and EPS Surprise
Danaher Corporation price-eps-surprise | Danaher Corporation Quote
Factors to Note
Improving supply chains and strong price realization are expected to drive Danaher’s third-quarter results. The Life Sciences segment is expected to reflect benefits from healthy demand across the life science, research, academic and applied markets.
Strong momentum in the industrial and applied end markets and strength in the water quality business are expected to drive revenues at the Environmental & Applied Solutions segment in the to-be-reported quarter.
However, weakness in the Biotechnology and Diagnostics segments due to a decrease in the sale of COVID-related products is expected to weigh on DHR’s top line in the soon-to-be-reported quarter. The top line is also expected to reflect adversities from foreign currency headwinds. For the third quarter, we expect the company’s total revenues to decline 13.3% year over year.
We expect Danaher’s Diagnostic segment revenues to drop 21.5% from third-quarter 2022 reported number due to lower COVID-related respiratory testing volumes.
Danaher expects total core revenues to decline in the low to mid-teens percentage range for the third quarter due to lower demand for COVID-19 testing, vaccines and therapeutics.
The escalating cost of sales due to raw material cost inflation has been denting DHR’s bottom line, and the third quarter is no exception. We expect a year-over-year decline of 27% in the company’s third-quarter earnings on an adjusted basis.
What Does the Zacks Model Say?
Our proven model does not conclusively predict 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 chances of beating estimates, which is not the case here, as elaborated below.
Earnings ESP: Danaher has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.87. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: Danaher currently carries a Zacks Rank #3.
Highlights of Q2 Earnings
Danaher’s second-quarter 2023 adjusted earnings of $2.05 per share surpassed the Zacks Consensus Estimate of $2.00. The bottom line decreased 25.5% year over year with a decline in sales. The company’s net sales of $7,157 million outperformed the consensus estimate of $7,098 million. However, it declined 7.7% year over year due to a decrease in the sale of COVID-related products.
Stocks to Consider
Here are some companies, which according to our model, have the right combination of elements to beat on earnings in this reporting cycle.
Stanley Black & Decker SWK has an Earnings ESP of +3.20% and a Zacks Rank #3. The company is scheduled to release third-quarter results on Oct 27. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stanley Black pulled off a trailing four-quarter earnings surprise of 47.2%, on average. The stock has gained 6.5% in a year.
Tenaris TS has an Earnings ESP of +2.89% and a Zacks Rank #3. The company is slated to release third-quarter results on Nov 1.
Tenaris delivered a trailing four-quarter earnings surprise of 7.7%, on average. The stock has rallied 16.9% in a year.
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Stanley Black & Decker, Inc. (SWK) : Free Stock Analysis Report
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