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Nobody Ever Mentions Danaher!

April 11, 2007 | About:
Jonathan D. Poland

Jonathan D. Poland

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A manufacturing conglomerate out of our nation’s capital run by two brilliant managers and investors: Mitchell and Steven Rales. These guys have been the best of the best over the last 2 decades. Danaher, the symbol is DHR on the NYSE. They have grown their mundane manufacturing business in spectacular fashion.

An initial investment of $100,000 has risen to over $7 Million, a 23.67% annualized rate. Compare that to Coca-Cola (13%/year) and Berkshire Hathaway (14%/year). Each of these companies has produced stellar track records, but Danaher with "The Rales Brothers" have done one hell of good job with their assets.

Using their own business system, Danaher has bought a plethora of businesses to add to their own line and let's look at the company from a numbers standpoint.

Company
DHR
4.02.2007
$71.47
Market Value (mil)
$22,090.00
Debt (mil.)
$2,430.00
Total Capitalization (mil.)
$24,200.00
Book Value
$21.56
Sales (mil.)
$9,600.00
Net Income (mil.)
$1,100.00
Earned Per Share
 
Current EPS
$3.47
2007 Estimate
$3.76
2002 EPS
$1.39
1997 EPS
$0.66
Current Dividend
$0.08
Ratios
 
P/E
19.01
Price/Book
331.49%
Dividend/EPS
2.13%
Net Profit Margin
11.46%
EPS/Book
16.09%
Growth in EPS
 
5 Year Growth
149.64%
10 Year Growth
425.76%
ROTC
4.55%
 

These are great returns and as you can see have correlated to great market returns as well. Earnings increases usually do!

Are you late to the party? Maybe... but maybe not! Right now, the company is trading with a "below average" price to earnings multiple - 19. Their historical P/E is over 23. The two brothers are great businessmen and obviously have an amazing process to make this thing go!

My publishing firm, PigsGetRich, does not own and has not recommended this stock to our clients. However, if they earn the $3.72 projected and the P/E continues to get back to normal historic levels, the price could be $85 - $90 in a year... “20% ain't too bad!”

_____________________
Jonathan D. Poland is the Founder, Editor and Chief of the PigsGetRich Investment Network. www.pigsgetrich.com

About the author:

Jonathan D. Poland
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.3/5 (7 votes)

Comments

armeetofo
Armeetofo - 7 years ago
it will be too big to be next Tyco?
armeetofo
Armeetofo - 7 years ago
I hold this company since Aug. 2005, up nicely but getting to big
wildcat
Wildcat - 7 years ago
Roll ups always blow up.

What is the internal rate of growth?

How much growth comes from buyouts ?
pigsgetrich
Pigsgetrich - 7 years ago
Only time will tell... I would like to provide the AutoNation example.
wildcat
Wildcat - 7 years ago
Just look at the internal growth rate

Sooner or later it will run out of things to buy that will grow EPS


Then it will blow up just like Worldcom - Tyco

Tyco just ran out of things to buy out
armeetofo
Armeetofo - 7 years ago
I did resaech about 7 hours and bought some more at $71.50
armeetofo
Armeetofo - 7 years ago
forgive me for misspelling, i mean 'research'
armeetofo
Armeetofo - 7 years ago
wildcat

i have to thank you for issues that you mentioned above, i did some more receach and come to my own conclusion, thanks again

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