Will Danaher's (DHR) Products & Buyouts Drive Q2 Earnings?

Danaher Corporation (NYSE:DHR) is set to release second-quarter 2019 results on Jul 18, before the market opens.

The company delivered impressive results in the last four quarters, surpassing estimates in all occasions. Its average earnings surprise is a positive 3.76%. In the last reported quarter, the company’s earnings of $1.07 surpassed the Zacks Consensus Estimate of $1.01.

In the past three months, the company’s shares have gained 13% compared with the industry’s growth of 0.6%.



Let us see how things are shaping up for Danaher this quarter.

Factors to Influence Q2 Results

Over the past few quarters, Danaher has been benefiting from initiatives — including focus on building an efficient workforce, enhancing product quality, product innovation and shareholder-friendly policies — undertaken under Danaher Business System (“DBS”). Positive impacts of these are likely to have impacted the second quarter as well. Also, rising popularity of products offered will be advantageous.

In addition, acquisitions made have been boosting results — evident from 2.5% positive impact on sales recorded in the first quarter of 2019. We believe that acquired assets, like Integrated DNA Technologies in April 2018, Blue Software in July 2018 and Labcyte Corporation in January 2019, might have positively impacted second-quarter results. On the flip side, costs and risks associated with acquisitions as well as adverse impact of unfavorable movements in foreign currencies remain concerning for its margins.

For the second quarter of 2019, the company anticipates adjusted earnings of $1.13-$1.16 per share, higher than 99 cents recorded in the year-ago quarter. Core sales are predicted to grow roughly 4-5% in the quarter.

For Life Sciences, popularity of the existing product offerings, and focus on innovation and commercial initiatives will be advantageous. Also, the segment stands to gain from growing business in developing nations, especially China, while its acquired assets (including Integrated DNA Technologies acquired in 2018) will boost business opportunities in attractive end-markets. For the second quarter of 2019, the Zacks Consensus Estimate for this segment’s revenues is pegged at $1,662 million, indicating growth of 3.6% from the year-ago reported figure and gain of 2.2% sequentially. Notably, average sales beat of 3.71% in the last four quarters is quite encouraging.

For the Environmental & Applied Solutions segment, growing demand for newly launched products (including CIJ 1580 industrial inkjet printer) as well as order improvement for Esko and X-Rite products will be beneficial. Also, business expansion in Europe and China will be boon. The Zacks Consensus Estimate for the segment’s revenues for the second quarter is pegged at $1,110 million, suggesting growth of 1.6% from the year-ago reported figure and gain of 5% sequentially.

For Diagnostics, rising international presence, effective marketing activities and growing popularity of products, including DxH 900 and DxH 520 analyzers, are likely to benefit results. The Zacks Consensus Estimate for the segment’s revenues for the second quarter is pegged at $1,587 million, indicating growth of 2.3% from the year-ago reported figure.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The case with Danaher is given below.

Earnings ESP: The company has an earnings ESP of 0.00% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.15.

Danaher Corporation Price, Consensus and EPS Surprise