Stock Analysis - Danaher Corp (DHR)

Initial Screening

Danaher Corp may not ring a lot of bells when you first hear the name. It probably also slips through the cracks of many investors’ screening criteria, but you’re looking at a company that has consistently outperformed the S&P 500 over the last 30 years.

So what does this company do? As a conglomerate holding company similar to Berkshire Hathaway, Danaher Corp focuses on mergers and acquisitions in the healthcare and environmental sectors. To achieve their performance they use an active approach pairing mergers and acquisitions with spinoffs. The current Danaher portfolio consists of 24 holdings.

Danaher's latest notable transactions were splitting (not spinning) off their dental assets into Envista Holdings (NYSE: NVST) in 2019 and acquiring the BioPharma business of General Electric in March 2020. As this was a split, shareholders had the option to acquire stocks of the new holding company for a discount, different from a spin-off in which they would receive shares of the new company.

Danaher’s peer group consists of other big conglomerates such as Berkshire Hathaway (NYSE: BRK-A / BRK-B) and Honeywell (NYSE: HON) which have comparable business structures but do focus on other sectors. This peer group is assembled under the assumption that you are comparing conglomerates. Depending on the websites you may use for your research, Danaher is also often compared to companies developing and selling medical devices only.

Caterpillar Infographic

Business Model

Danaher Corp acquires highly specialized small to medium-sized companies and applies their very own Danaher Business System (short: DBS) to move their business forward. This system is driven by Danaher’s core values to achieve the success which starts with people and ends with performance. They then believe that superior performance will attract further talent and the cycle starts again, constantly improving the way they do business.

Danaher is highly specialized and focused on innovation in three major business units: Diagnostics, Life Science, and Environmental and Applied Solutions. These units are in very future-proof fields as healthcare and environmental solutions will be needed for decades to come, whether it’s the growing aging population or tackling climate change and its impact on everyday life.

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Disclaimer: I do hold a position in Danaher Corporation (NYSE: DHR). In 2020 it has emerged as one of my biggest holdings in the healthcare ...

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Harry Goldstein 2 weeks ago Member's comment

Good analysis on $DHR, thanks.

Just-Dividends 2 weeks ago Author's comment

Thank you for the kind words