Industries: equipment, manufacturing
Danaher designs, manufactures and markets professional, medical, industrial and commercial products, such as electrical test and measurement instruments, radio frequency signal, distance, pressure and temperature, and thermal imaging instruments; water quality analytical instruments, disinfection systems, and industrial water treatment solutions; fuel dispensers for petroleum and compressed natural gas, point-of-sale and secure electronic...More payment technologies for retail gas stations; and analytical instruments, reagents, consumables, and software for life sciences and medical diagnostics. Less
| Most recent | Growth rate (CAGR) | |||
|---|---|---|---|---|
| 1 year | 5 years | 10 years | ||
| Book value of equity per share | $41.84 | 7.5% | 5% | 10.3% |
| BV including aggregate dividends | 9.1% | 16% | 16% | |
| Most recent | Median | |||
|---|---|---|---|---|
| 1 year | 5 years | 10 years | ||
| ROE | 8.5% | 9.8% | 10.5% | 11.8% |
| ROA | 5% | 5.6% | 5.8% | 7.4% |
| Most recent | Growth rate (CAGR) | |||
|---|---|---|---|---|
| 1 year | 5 years | 10 years | ||
| EPS | $3.40 | -5.8% | -1.3% | 5.9% |
| Annual dividends | $0.64 | 10.3% | 30.4% | 18.2% |
| Share price | $139.63 |
| Most recent | Median | |||
|---|---|---|---|---|
| 1 year | 5 years | 10 years | ||
| P/B ratio | 3.34 | 2.6 | 2.5 | 2.3 |
| P/E ratio | 41.07 | 27.5 | 23.6 | 20.0 |
A company creates wealth for its long-term shareholders in 2 main ways - through dividend payments and through the accumulation of retained earnings. This graph shows the accumulation of per-share equity of long-term shareholders (green bars), which consists of the retained earnings plus all capital invested in the company, and the cumulative dividends the company has paid over time per share of its stock (blue bars).
In the words of Warren Buffett: "We're looking for... businesses earning good returns on equity while employing little or no debt."
Return on equity is a key metric of financial performance, indicating a company's ability to generate earnings using shareholder capital. Over time, ROE is one of the major determinants of the rate at which a company creates shareholder wealth. The average ROE for large U.S. companies is 12%, and many investors use it as a threshold for attractive investments.
Companies can boost ROE by increasing leverage, which reduces the safety of the investment. Therefore, it is useful to look at the return on assets (ROA), which measures a company's earning power regardless of its capital structure. A widening gap between ROE and ROA may be a warning sign that should be thoroughly investigated.
Earnings per share is a popular metric used to value a company (using P/E ratio); growth in EPS is often used to judge company growth potential. However, many investors believe that EPS is an inferior metric to ROE, because it ignores the amount of capital the company used to generate earnings.
Free cash flow shows how much cash a company generates from operations, above and beyond what is required to maintain or expand its productive assets. This cash can be returned to investors, or spent by management on growing the company or paying back its debts.
Balance sheets of many companies contain intangible assets such as goodwill, trademarks, patents, etc. Many investors consider intangibles more difficult to value than physical assets. If intangible assets had been valued incorrectly, they must be impaired, resulting in a loss charged against shareholder equity. This chart demonstrates the potential loss to shareholder equity from such impairments.
Companies often use debt financing to increase their return on equity. However, as the amount of debt financing increases relative to the amount of equity financing, the company becomes more sensitive to down turns and other negative events. As a result, many investors use the ratio of debt to equity as a measure of a company's financial risk, and avoid companies that have this ratio above 1.
This chart shows shareholder equity as a percentage of total assets, allowing investors to judge the overall leverage. Companies with a higher proportion of equity can be viewed as safer investments. This metric is particularly important for highly leveraged institutions, such as banks, where it must be at least 4% according to government regulations.
The ratio of current assets to current liabilities is known as the current ratio. This metric is a quick measure of the company's ability to pay its short-term obligations. A current ratio below 1 is a warning sign that should be investigated, especially for companies that cannot count on adequate cash flow from operations.
This chart shows the cumulative dilution of investor ownership in a company over time. Dilution reduces an investor's participation in the future earnings. Dilution increases when a company issues new shares, and decreases when a company buys its shares back. Many investors avoid companies with large chronic dilution.
DuPont
analysis provides insight into factors affecting the Return On Equity of a company.
The DuPont equation decomposes ROE as follows:
ROE = (Net margin) * (Asset turnover) * (Asset to equity ratio)
Net margin indicates operating efficiency, Asset turnover measures
the total asset use efficiency, and the Asset to equity ratio is a measure of financial leverage.
The dividend payout ratio tells investors what percentage of earnings a company returns to shareholders, and what percentage it retains and reinvests. This ratio represents a major capital allocation decision by the company, and can be used to judge management rationality. Rational management should pay out all earnings that cannot be productively reinvested. Therefore, a low dividend payout ratio for a profitable company with a low growth potential may be a warning sign.
Many investors use the P/B ratio as a quick way of judging company valuation. Value investors - followers of Graham and Dodd - specifically seek out companies with low P/B ratios. However, investors should be careful not to make investment decisions on this metric alone, without considering a company's earning and growth potential, since a low P/B ratio can be a sign of a bleak future for the business.
P/E ratio is a popular way of making a quick judgment of a company valuation. Value investors - followers of Graham and Dodd - often seek solid companies with low P/E ratios as investment opportunities. However, P/E ratio represents an oversimplified approach to business valuation, and can often lead to incorrect investment decisions.
The Company obtained control of Joslyn Corporation as of September 1, 1995 when Joslyn's shareholders tendered approximately 75% of the outstanding shares to Danaher for $34 per share in cash. The remaining 25% was acquired in October, 1995. Total consideration for Joslyn was approximately $245 million. The fair value of assets acquired was approximately $ 345 million and approximately $100 million of liabilities were assumed. The transaction was accounted for as a step acquisition purchase.
On July 7, 1998, Fluke Corporation was acquired and merged into the Company. The Company issued 17,748,572 shares of common stock in exchange for all outstanding Fluke shares. The transaction was a tax-free reorganization and will be accounted for as a pooling-of-interests.
On July 14, 1999, the Company acquired Hach Company. The Company issued .2987 shares of common stock in exchange for each outstanding share of Hach Company. The transaction was a tax-free reorganization and was accounted for as a pooling-of-interests. Accordingly, the financial statements presented have been restated to reflect the combined companies. Sales reported have increased $111.1 million for the nine months ended October 1, 1999 and $104.0 million for the nine months ended September 25, 1998. Hach is engaged in the manufacture and marketing of instruments and kits to analyze the chemical and other properties of water and aqueous solutions.
During 2004 we acquired 13 businesses for an aggregate purchase price of approximately $1.6 billion (including transaction costs and net of cash acquired).
During 2005 we acquired 13 businesses for an aggregate purchase price of approximately $885 million (including transaction costs and net of cash acquired).
As part of our business strategy we acquire businesses in the ordinary course, some of which may be material. During 2006 we acquired eleven businesses for an aggregate purchase price of approximately $2.7 billion (including transaction costs and net of cash acquired).
In November 2007, the Company significantly expanded its test and measurement business with the acquisition of all of the outstanding shares of Tektronix, Inc. (Tektronix) for total cash consideration of approximately $2.8 billion, including transaction costs and net of cash and debt acquired. Tektronix is a leading supplier of test, measurement, and monitoring products, solutions and services for engineers in the communications, computer, consumer electronics and education industries, as well as in military/aerospace, semiconductor and a broad range of other industries worldwide. Tektronix had annual revenues of approximately $1.1 billion in its most recently completed fiscal year, and is part of Danaher's test and measurement business included in the Professional Instrumentation segment. The Company funded the purchase price of the Tektronix acquisition with proceeds from the issuance of commercial paper and the Company's November 2007 common stock offering (described below), and to a lesser extent from available cash. Tektronix is expected to provide additional sales and earnings growth opportunities for the Company's test and measurement business, both through the growth of existing products and services and through the potential acquisition of complementary businesses. The combination of Tektronix with Danaher's existing test and measurement businesses is also expected to yield significant cost reductions. Company management and other personnel are devoting significant attention to the successful integration of the Tektronix business into Danaher. On November 7, 2007, the Company completed the underwritten public offering of 6.9 million shares of Danaher common stock at a price to the public of $82.25 per share. The net proceeds, after expenses and the underwriters' discount, were approximately $550 million, which were used to partially fund the acquisition of Tektronix. In addition, on December 11, 2007, the Company completed the underwritten public offering of $500 million aggregate principal amount of 5.625% senior notes due 2018. The net proceeds, after expenses and the underwriters' discount, were approximately $493 million, which were used to repay a portion of the commercial paper issued to finance the acquisition of Tektronix.
As part of our business strategy we acquire businesses in the ordinary course, some of which may be material. During 2007 we acquired twelve businesses for an aggregate purchase price of approximately $3.6 billion (including transaction costs and net of cash acquired).
On June 30, 2011, following the successful completion of the Companys tender offer for all of the outstanding shares of common stock of Beckman Coulter, Inc., the Company completed the acquisition of Beckman Coulter. Beckman Coulter develops, manufactures and markets products that simplify and automate complex biomedical testing. The Company paid approximately $5.5 billion in cash (net of approximately $450 million of cash acquired) to acquire all of the outstanding shares of common stock of Beckman Coulter and assumed approximately $1.6 billion of indebtedness in connection with the acquisition. The Company financed the acquisition of Beckman using (1) approximately $2.3 billion of available cash, (2) net proceeds, after expenses and the underwriters discount, of approximately $966 million from the underwritten public offering of the Companys common stock on June 21, 2011, (3) net proceeds, after expenses and the underwriters discount, of approximately $1.8 billion from the underwritten public offering of senior unsecured notes on June 23, 2011, and (4) net proceeds from the sale of additional commercial paper under the Companys U.S. commercial paper program prior to the closing of the acquisition.
On August 31, 2015, Pentagon Merger Sub, Inc., a New York corporation and an indirect, wholly-owned subsidiary of the Company, acquired all of the outstanding shares of common stock of Pall Corporation, a New York corporation, for $127.20 per share in cash, for a total purchase price of approximately $13.6 billion, net of assumed debt of $417 million and acquired cash of approximately $1.2 billion. Pall is a leading global provider of filtration, separation and purification solutions that remove contaminants or separate substances from a variety of solids, liquids and gases, and is now part of the Company's Life Sciences & Diagnostics segment. In its fiscal year ended July 31, 2015, Pall generated consolidated revenues of approximately $2.8 billion. Pall serves customers in the biopharmaceutical, food and beverage and medical markets as well as the process technologies, aerospace and microelectronics markets. The Pall Acquisition provides additional sales and earnings growth opportunities for the Company by expanding geographic and product line diversity, including new product and service offerings in the areas of filtration, separation and purification, and through the potential acquisition of complementary businesses. As Pall is integrated into the Company, the Company also expects to realize significant cost synergies through the application of the Danaher Business System and the combined purchasing power of the Company and Pall. The Company preliminarily recorded an aggregate of $9.4 billion of goodwill related to the Pall Acquisition.
On July 2, 2016, Danaher completed the separation of its former Test & Measurement segment, Industrial Technologies segment (excluding the product identification businesses) and the retail/commercial petroleum business by distributing to Danaher stockholders on a pro rata basis all of the issued and outstanding common stock of Fortive Corporation, the entity Danaher incorporated to hold such businesses. To effect the Separation, Danaher distributed to its stockholders one share of Fortive common stock for every two shares of Danaher common stock outstanding as of June 15, 2016, the record date for the distribution. Fractional shares of Fortive common stock that otherwise would have been distributed were aggregated and sold into the public market and the proceeds distributed to Danaher stockholders.