Following the completion of a major takeover, Danaher Corp. DHR seems to have clear visibility about its performance in the ongoing quarter and upcoming year. The company has consequently reaffirmed its guidance for the fourth-quarter 2015 and provided the 2016 outlook.
In particular, Danaher reiterated the adjusted net earnings guidance and continues to expect it to be in the range of $1.25 to $1.29 per share in the fourth quarter of 2015. On the other hand, the company projects the adjusted net earnings per share for 2016 to be in the range of $4.80 – $4.95 and revenue growth to be in the band of 2% and 3%.
The guidance includes Danaher’s optimism about its robust Danaher Business System (“DBS”) that focuses on three critical areas of quality, delivery, and cost & innovation. Notably, DBS has been helping the company attain robust core revenue growth, strong cash flow and better earnings since its implementation. Although Danaher is witnessing sluggishness in its industrial-oriented businesses, it is aiming at outpacing earnings and enhancing shareholders’ wealth in coming years on the back of strong margin performance.
Moreover, Danaher is highly optimistic about the recently concluded largest acquisition in its history. On Aug 31, 2015, Danaher completed the takeover of Pall Corp. for approximately $13.8 billion. Following this transaction, the company has successfully merged Pentagon Merger Sub, Inc., an indirect wholly owned subsidiary of Danaher, into Pall Corp. Now Pall has become an indirect wholly owned subsidiary of Danaher.
Moreover, earlier this month, Danaher named the new diversified industrial growth company, which it had planned to launch as part of the split following the Pall merger deal, as Fortive Corporation.
We believe Danaher is well positioned to drive synergies from the integration of Pall Corp. This will go a long way in strengthening top-line growth of Danaher in the quarters to come.
Danaher currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Dycom Industries Inc. DY, Federal Signal Corp. FSS and Macquarie Infrastructure Corp. MIC. While Dycom sports a Zacks Rank #1 (Strong Buy), both Federal Signal and Macquarie hold a Zacks Rank #2 (Buy).
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