Danaher CorporationDHR

Morningstar Rating

Stock Research and Analysis

by Daniel Holland

Danaher has generated double-digit margins and growth through acquisitions and its proprietary business integration system. Its focus on squeaking out efficiencies and attacking niche markets has helped the firm build a narrow moat.

Danaher's path Read more

Bulls Say

Danaher products enjoy great brand presence. For instance, Fluke is the leader in handheld electronic test equipment, and Gilbarco Veeder-Root dominates the retail petroleum dispenser market.

Before Danaher formed its sixth strategic platform, medical technology, management studied the industry for about three years and says it conducted more than 400 customer interviews.

Danaher derives about 40% of its revenue from high-margin recurring sources. Read more

Bears Say

About 75% of Danaher's sales growth during the last five years has come from acquisitions. If the well of new acquisition candidates dries up, Danaher's growth rate could slow.

Although Tektronix helped to beef up Danaher's presence in the test and measurement market, the acquisition cost $2.8 billion of which $1.8 billion went on the balance sheet as goodwill.

Many manufacturing companies are beginning to catch up with Danaher's processes as former Danaher managers take high-level positions outside of the firm, leading competition to drive margins down. Read more

Strategy

Danaher focuses on purchasing businesses where it can introduce scale into a previously fragmented market. Management will often study a market for years before making a purchase. Candidates must possess Read more

Management

Danaher was founded by Steven and Mitchell Rales in the early 1980s. Combined, they own almost 22% of outstanding stock, and they both remain on the nine-member board. Steven Rales is the chairman, and six members are independent. Board members and Read more

Profile

Danaher is a diversified manufacturer, housing more than 40 industrial brands in three segments. The professional instrumentation segment produces electronic, medical, and Read more

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