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Can Danaher Corp. (DHR) Surprise this Earnings Season?

Danaher Corp.(DHR) is set to report third-quarter 2014 results on Oct 16 before the opening bell. Last quarter, the company reported year over year growth in both earnings and revenues. Let’s consider some important factors that may affect the upcoming results.

Factors Influencing This Quarter

This leading designer, manufacturer and supplier of professional, medical, industrial and commercial products is able to drive organic growth and margin expansion on the back of its evolving operating culture, Danaher Business System (DBS). The DBS is a set of tools and processes designed to improve business performance in the critical areas of quality, delivery, cost and innovation.

Moreover, the company is gradually expanding its presence in the healthcare and dental markets, backed by an increase in aging population and higher spending on healthcare and fitness. The recently announced acquisitions of Siemens Healthcare Diagnostics and Nobel Biocare are expected to further strengthen the company’s prowess in the healthcare arena. This apart, Danaher has announced about 10 new acquisitions amounting to about $1 billion since Apr 2014.

However, the investments related to acquisitions are likely to weigh on the company’s financials in the near term. At the same time, ongoing sluggishness in the Test & Measurement segment remains a concern.

Earnings Whispers?

Our proven model does not conclusively show that Danaher is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Earnings ESP for Danaher is 0.0%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 88 cents.

Zacks Rank #3 (Hold): Danaher has a Zacks Rank #3 but we need to have a positive ESP to be confident about an earnings surprise. We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Apple Inc. (AAPL), with an Earnings ESP of +3.85% and a Zacks Rank #1 (Strong Buy).

Curtiss-Wright Corporation (CW), with an Earnings ESP of +2.30% and a Zacks Rank #1.

HCA Holdings, Inc. (HCA), with an Earnings ESP of +9.18% and a Zacks Rank #1.

Read the Full Research Report on DHR
Read the Full Research Report on AAPL
Read the Full Research Report on CW
Read the Full Research Report on HCA


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