Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
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Highlights from the ratings report include:
- DANAHER CORP has improved earnings per share by 5.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, DANAHER CORP increased its bottom line by earning $2.77 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($3.22 versus $2.77).
- DHR's debt-to-equity ratio is very low at 0.25 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for DANAHER CORP is rather high; currently it is at 56.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.40% is above that of the industry average.
- Net operating cash flow has increased to $961.14 million or 37.31% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 4.65%.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and commercial products and services primarily in North America, Europe, and Asia/Australia. Danaher has a market cap of $36.59 billion and is part of the industrial goods sector and industrial industry. The company has a P/E ratio of 16.8, below the S&P 500 P/E ratio of 17.7. Shares are up 12.3% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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