DHR - Embedded Expectations Analysis - 2021 03 02
Danaher Corporation (DHR:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 31.4x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about their vaccine and therapeutic projects, Cytiva and Pall Biotech margin growth, and core revenue growth across segmentsSpecifically, management may lack confidence in their ability to sustain margin performance and shipment growth for Cepheid, expand margins for Cytiva and Pall Biotech, and maintain order growth for Cytiva. Furthermore, management may be exaggerating the extent of their involvement in vaccine and therapeutic projects and the sustainability of increased sales, particularly for COVID-19 related transactions. They may also lack confidence in their ability to expand core revenue growth for ChemTreat, meet capital equipment sales guidance, and improve their marking and coding businesses. Moreover, they may be downplaying concerns about the pace of the recovery of intranational travel in China and their business to pre-COVID levels. Finally, they may lack confidence in their ability to maintain their free cash flow and sustain productivity and operations gains from Danaher Business System (DBS) across all platforms
Danaher designs, manufactures and markets medical, industrial and commercial products and services. The company's segments include: Life Sciences, which provides research tools to study genes, proteins, metabolites and cells, in order to understand the causes of disease, identify therapies and test drugs and vaccines; Diagnostics, which provides analytical instruments, reagents, consumables, software and services that hospitals, physicians' offices, reference laboratories and other critical care settings use to diagnose disease and make treatment decisions; and Environmental and Applied Solutions, which provides products and services to protect resources and global food and water supplies.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
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- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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