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Why Is Danaher (DHR) Up 2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Danaher (DHR - Free Report) . Shares have added about 2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Danaher due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Danaher’s second-quarter 2024 adjusted earnings (excluding 50 cents from non-recurring items) of $1.72 per share surpassed the Zacks Consensus Estimate of $1.57. The bottom line declined 0.6% year over year.
Danaher’s net sales of $5.7 billion outperformed the consensus estimate of $5.6 billion. However, the metric declined 3% year over year due to lower core sales in the Biotechnology segment.
Organic sales decreased 3.5%. Acquisitions had a positive impact of 2% on quarterly sales while adverse foreign-currency translations lowered sales by 1.5%.
Segmental Discussion
Danaher currently operates under the operating segments discussed below.
Revenues from the Life Sciences segment totaled $1.8 billion, down 1.5% year over year. We expected the Life Sciences segment’s revenues to be $1.8 billion. Core sales dipped 5.5% year over year. Acquisitions/divestitures led to a 6% increase in sales. Operating profit was $233 million, down 31.5% year over year.
Revenues from the Diagnostics segment totaled $2.3 billion, up 1.5% year over year. Our estimate for revenues in the quarter was $2.2 billion. Core sales increased 3% year over year. Foreign currency had a negative impact of 1.5%. Operating profit was $556 million, up 31.1% on a year-over-year basis.
Revenues from the Biotechnology segment totaled $1.7 billion, down 7% year over year. Our estimate for the quarter was $1.6 billion. Core sales dropped 9% for the segment. Operating profit was $462 million, down 3.8% year over year.
Margin Profile
In the second quarter, Danaher’s cost of sales decreased 10.8% year over year to $2.3 billion. Gross profit of $3.4 billion increased 3.3% year over year. The gross margin in the quarter was 59.7% compared with 56.1% in the year-ago quarter.
Selling, general and administrative expenses of $1.9 billion recorded an increase of 4.2% on a year-over-year basis. Research and development expenses were $391 million, up 8.3% year over year.
Danaher’s operating profit increased 0.4% year over year to $1.2 billion. Operating margin increased to 20.3% from 19.7% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the second quarter, Danaher had cash and equivalents of $2.4 billion compared with $5.9 billion in 2023 end. Long-term debt was $16.3 billion at the end of the quarter compared with $16.7 billion at the end of December 2023.
Danaher generated net cash of $3.2 billion from operating activities in the first six months of 2024 compared with $3.9 billion in the previous year’s quarter. Capital expenditures totaled $578 million in the same period, down 2.9% year over year. Adjusted free cash flow was $1.1 billion in the first six months of 2024.
In the first six months of 2024, Danaher paid out dividends of $377 million, up around 10.7% on a year-over-year basis.
Outlook
For the third quarter of 2024, Danaher expects adjusted core revenues from continuing operations to decline in low-single digits on a year-over-year basis.
The same is also anticipated to decrease in low-single digits on a year-over-year basis in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -8.7% due to these changes.
VGM Scores
At this time, Danaher has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Danaher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Danaher (DHR) Up 2% Since Last Earnings Report?
It has been about a month since the last earnings report for Danaher (DHR - Free Report) . Shares have added about 2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Danaher due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Danaher Q2 Earnings Beat, Biotechnology Sales Dip Y/Y
Danaher’s second-quarter 2024 adjusted earnings (excluding 50 cents from non-recurring items) of $1.72 per share surpassed the Zacks Consensus Estimate of $1.57. The bottom line declined 0.6% year over year.
Danaher’s net sales of $5.7 billion outperformed the consensus estimate of $5.6 billion. However, the metric declined 3% year over year due to lower core sales in the Biotechnology segment.
Organic sales decreased 3.5%. Acquisitions had a positive impact of 2% on quarterly sales while adverse foreign-currency translations lowered sales by 1.5%.
Segmental Discussion
Danaher currently operates under the operating segments discussed below.
Revenues from the Life Sciences segment totaled $1.8 billion, down 1.5% year over year. We expected the Life Sciences segment’s revenues to be $1.8 billion. Core sales dipped 5.5% year over year. Acquisitions/divestitures led to a 6% increase in sales. Operating profit was $233 million, down 31.5% year over year.
Revenues from the Diagnostics segment totaled $2.3 billion, up 1.5% year over year. Our estimate for revenues in the quarter was $2.2 billion. Core sales increased 3% year over year. Foreign currency had a negative impact of 1.5%. Operating profit was $556 million, up 31.1% on a year-over-year basis.
Revenues from the Biotechnology segment totaled $1.7 billion, down 7% year over year. Our estimate for the quarter was $1.6 billion. Core sales dropped 9% for the segment. Operating profit was $462 million, down 3.8% year over year.
Margin Profile
In the second quarter, Danaher’s cost of sales decreased 10.8% year over year to $2.3 billion. Gross profit of $3.4 billion increased 3.3% year over year. The gross margin in the quarter was 59.7% compared with 56.1% in the year-ago quarter.
Selling, general and administrative expenses of $1.9 billion recorded an increase of 4.2% on a year-over-year basis. Research and development expenses were $391 million, up 8.3% year over year.
Danaher’s operating profit increased 0.4% year over year to $1.2 billion. Operating margin increased to 20.3% from 19.7% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the second quarter, Danaher had cash and equivalents of $2.4 billion compared with $5.9 billion in 2023 end. Long-term debt was $16.3 billion at the end of the quarter compared with $16.7 billion at the end of December 2023.
Danaher generated net cash of $3.2 billion from operating activities in the first six months of 2024 compared with $3.9 billion in the previous year’s quarter. Capital expenditures totaled $578 million in the same period, down 2.9% year over year. Adjusted free cash flow was $1.1 billion in the first six months of 2024.
In the first six months of 2024, Danaher paid out dividends of $377 million, up around 10.7% on a year-over-year basis.
Outlook
For the third quarter of 2024, Danaher expects adjusted core revenues from continuing operations to decline in low-single digits on a year-over-year basis.
The same is also anticipated to decrease in low-single digits on a year-over-year basis in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -8.7% due to these changes.
VGM Scores
At this time, Danaher has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Danaher has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.