Danaher Corp. DHR is scheduled to report first-quarter 2015 results before the closing bell on Apr 23. In the preceding quarter, the company’s adjusted earnings came in line with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Danaher’s comprehensive business culture, the Danaher Business System (“DBS”), which supervises the entire operation ranging from idea generation and product development to commercialization and sales, continues to act as the primary growth driver. Also, the company has largely benefited from its proactive acquisition strategy over the past year, wherein it invested around $4 billion in 8 acquisitions. Last quarter, the company closed some key acquisitions like that of Nobel Biocare and Devicor. Moreover, the company expects to complete the merger of its Communications business with NetScout Systems by mid-2015. These transactions represent significant opportunities for the company to strengthen its current market position in the near term.
Moreover, most operating firms under Danaher like Hach, Fluke, Veeder-Root, AB Sciex, Implant Direct, Radiometer and Esko, have been performing quite well in the past quarters, thereby allowing it to achieve core margin expansion. At the same time, most of the company’s newly-launched products have received positive customer response and this is expected to drive growth, going forward.
Danaher’s concerted efforts to introduce new products are commendable, as it would likely strengthen its position in the healthcare and dental markets. Over the years, the company has improved its presence in these markets, supported by a surge in elderly population and increased spending on healthcare and fitness. This trend is likely to continue in the future as well.
Further, Danaher’s diversified geographical presence has successfully reduced its dependence on domestic revenue generation. The company’s emerging markets like the Middle East and China have performed well in the past quarters, and are expected to be key international growth drivers. Moreover, impressive economic recovery in the U.S. and solid performance of Western Europe adds to its strength.
Earnings Whispers
Our proven model shows that Danaher is likely to beat earnings because it has the right combination of two key ingredients, a positive Earnings ESP and a favorable Zacks Rank.
Positive Zacks ESP: Earnings Surprise Prediction or ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at 4.30%. This is a leading indicator of a likely positive earnings surprise for the shares.
Zacks Rank #3: Note that stocks with Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) have a significantly higher chance of beating earnings. The sell-rated stocks (with Zacks Rank #4 and #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions momentum.
The combination of Danaher’s Zacks Rank #3 and positive ESP makes us reasonably confident of a positive earnings beat on Apr 23.
Other Stocks to Consider
Here are some companies which you may also consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Apple Inc. AAPL, Earnings ESP of +1.38% and a Zacks Rank #2.
AXIS Capital Holdings Limited AXS, Earnings ESP of +13.56% and a Zacks Rank #1.
Amazon.com Inc AMZN, Earnings ESP of +175.00% and a Zacks Rank #3.
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