Danaher: No Need To Fix What Isn't Broken

Danaher's (DHR) multiyear shift away from industrial end-markets and towards life sciences and diagnostics continues to benefit shareholders, with the stock continuing to outperform its former industrial peer group, while performing more or less in line with newer peers like Thermo Fisher (TMO). Although an upcoming CEO transition holds some modest risk, Danaher has amply demonstrated that it has a deep management bench and that it reinvests in internal executive talent development.

The only real issue, and this will be no surprise to most readers, is the valuation. Even though I assume that Danaher will actually grow faster over the next decade than the trailing 10-15 years (growing FCF at a compounded rate of around 10%), that still only suggests mid-single-digit total returns. Maybe that's enough given the above-average quality of this company, but I remain concerned about relatively limited prospects for positive re-rating with what is already a widely-loved company.

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Danaher: No Need To Fix What Isn't Broken