Some stocks really test value discipline. Investors don't often get a chance to buy Danaher (DHR) shares at especially attractive prices. In fact, it's about a once a year opportunity. With the strong rebound in the shares since the summer of 2011, valuation has become tricky in what is one of the better-run conglomerates around.
Growth A Little Light, Margins Quite Strong
Danaher's quarter was a little mixed, but only in the context of a stock where the expectations are always pretty substantial. Core revenue rose 4% this quarter, with the strongest organic growth coming from life sciences (up 6%) and environmental (up more than 5%). Significantly, all reporting units delivered organic growth this period.
All in all, margins were quite good this quarter. True, gross margin did drop about 250 basis points but that was already widely expected. What was not expected was the 16.5% reported operating margin, nor the segment operating margin of 17.2% - both about half a point better than most sell-side analysts had forecast.
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Danaher Gets Its Ducks In A Row
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