Tuesday, February 16, 2016

Seeking Alpha: Danaher Remaking Itself Once Again

If you're going to pay up for a stock, you should at least get what you think you're paying for - I believe 3M (NYSE:MMM) fits that bill given its strong record of innovation and returns on capital, and I think there's an argument to be made that Danaher (NYSE:DHR) fits on the growth side of the ledger. There are going to be readers who take issue with Danaher's continuous M&A and the resulting high level of goodwill and intangibles on the balance sheet. Likewise, some investors have been alienated by the high multiples the company paid for Nobel Biocare and Pall.

The company also deserves a lot of credit for its Danaher Business System. I have no problem turning my high ambient level of cynicism against all manner of corporate-speak nonsense, but Danaher has acquired more than a couple of companies that I followed in my sell-side days, and hearing back from my contacts, acquaintances, and friends in those companies leads me to believe that DHR really does have a strong set of policies aimed at driving ongoing customer-focused revenue growth and margin improvement.

I still value Danaher on a pre-split basis, and I don't see the shares as especially cheap on the assumption on mid-single-digit revenue growth and high-single-digit free cash flow growth. As a strong competitor with ample non-cyclical exposure, it's not the worst place to wait out this industrial recession.

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Danaher Remaking Itself Once Again

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