Danaher (DHR) Is Today's Water-Logged And Getting Wetter Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Danaher ( DHR) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Danaher as such a stock due to the following factors:

  • DHR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $183.6 million.
  • DHR has traded 1.5 million shares today.
  • DHR traded in a range 522.7% of the normal price range with a price range of $4.21.
  • DHR traded below its daily resistance level (quality: 32 days, meaning that the stock is crossing a resistance level set by the last 32 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on DHR:

Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. The stock currently has a dividend yield of 0.5%. DHR has a PE ratio of 20.7. Currently there are 13 analysts that rate Danaher a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Danaher has been 2.9 million shares per day over the past 30 days. Danaher has a market cap of $53.7 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.18 and a short float of 1.2% with 3.31 days to cover. Shares are up 0.5% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Danaher as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • DHR's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 4.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DHR's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, DHR has a quick ratio of 1.58, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for DANAHER CORP is rather high; currently it is at 57.53%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.62% is above that of the industry average.
  • Net operating cash flow has increased to $991.70 million or 10.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -21.46%.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Industrial Conglomerates industry average. The net income increased by 9.7% when compared to the same quarter one year prior, going from $616.80 million to $676.40 million.

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