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Danaher (DHR) to Report Q3 Earnings: Is a Beat in Store?

Zacks.com logo Zacks.com 10/19/2020

Danaher Corporation DHR is set to release third-quarter 2020 results on Oct 22, before market open.

The company delivered impressive results in the last four quarters, beating estimates throughout. Earnings surprise for the quarters was 10.83%, on average. In the last reported quarter, the company’s earnings of $1.44 per share surpassed the Zacks Consensus Estimate of $1.06 by 35.85%.

In the past three months, Danaher’s shares have gained 17.6% compared with the industry’s growth of 12.6%.

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Let us delve deeper.

Key Factors and Estimates for Q3

Danaher’s solid product offerings and a dedicated workforce as well as an impressive 4% contribution from Cytiva positively impacted results in the second quarter of 2020. This trend is anticipated to have impacted the company’s top-line performance in the third quarter as well. Notably, Cytiva’s contribution to core sales growth is expected to be 300-400 basis points (bps) in the quarter.

The company anticipates the change in core revenues in the third quarter to be in low- to mid-single digits on a year-over-year basis. The change increases to mid- to high-single digits after including the impact of Cytiva.

The Zack Consensus Estimate for third-quarter revenues of $5,520 million suggests a 9.6% increase from the year-ago reported figure and 4.2% growth from the previous quarter’s reported number. It is worth mentioning here that the company reported better-than-expected revenue results in two of the last four quarters, while lagged estimates in two. The sales surprise for the four quarters was 2.06%, on average.

For the Life Sciences segment, an increase in sales of bioprocessing genomic and automation products as well as any business from new products (including Triple Quad 7500 mass spectrometer and others) is expected to have aided third-quarter performance. Danaher’s projections suggest a low-double-digit year-over-year increase in the segment’s core sales in the quarter.

The Zacks Consensus Estimate for the Life Sciences segment is pegged at $2,716 million, suggesting a 60.1% year-over-year increase and 2.8% sequential growth. Its sales surprise, on average, for the last four quarters is 1.95%.

Further, Danaher anticipated the Diagnostics segment’s performance in the third quarter to have been aided by an impressive demand for care diagnostics and molecular diagnostics-related products. Business from new products is expected to have aided too. The company’s projection points toward a high-single-digit increase in the segment’s third-quarter core sales.

The Zacks Consensus Estimate for the Diagnostics segment’s revenues for the third quarter is pegged at $1,701 million, reflecting growth of 6.2% from the year-ago reported figure and an increase of 2.5% from the sequential reported number. The segment’s average sales surprise for the last four quarters is 3.29%.

For the Environmental & Applied Solutions segment, the company’s projections suggest flat top-line results for the third quarter. The consensus estimate for the segment is pegged at $1,048 million, suggesting a year-over-year decline of 3.1% and sequential growth of 5.3%. Its sales surprise, on average, for the last four quarters is 1.49%.

On the flip side, the pandemic-related worries as well as an unwarranted rise in costs and expenses, adversities related to high debts and forex woes, if any, might have hurt results in the quarter. The Zack Consensus Estimate for Danaher’s earnings is pegged at $1.37 per share, suggesting an 18.1% increase from the year-ago reported figure. However, estimates suggest a decline of 4.9% from the previous quarter’s reported figure.

Earnings Whispers

Our proven model suggests an earnings beat for Danaher this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an earnings ESP of +2.56%, as the Most Accurate Estimate of $1.41 is above the Zacks Consensus Estimate of $1.37.

Danaher Corporation Price, Consensus and EPS Surprise

 

chart, line chart: Danaher Corporation Price, Consensus and EPS Surprise © Provided by Zacks.com Danaher Corporation Price, Consensus and EPS Surprise

Danaher Corporation price-consensus-eps-surprise-chart | Danaher Corporation Quote

Zacks Rank: Danaher currently carries a Zacks Rank #2.

Other Stocks That Warrant a Look

Here are some other companies in the industry that you may want to consider as according to our model, these too have the right combination of elements to post an earnings beat this quarter:

ITT Inc. ITT currently has an Earnings ESP of +2.28% and it sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

3M Company MMM presently has an Earnings ESP of +0.97% and a Zacks Rank #2.

General Electric Company GE currently has an Earnings ESP of +46.67% and a Zacks Rank #3.

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