Danaher Corporation’s DHR third-quarter 2024 adjusted earnings (excluding 59 cents from non-recurring items) of $1.71 per share surpassed the Zacks Consensus Estimate of $1.56. The bottom line declined 0.6% year over year.

Danaher’s reported net sales of $5.8 billion, which beat the consensus estimate of $5.6 billion. The metric increased 3.1% year over year, driven by robust sales in the Diagnostics and Life Sciences segments.

DHR’s core sales increased 0.5%. Acquisitions had a positive impact of 2.5% on quarterly sales, while foreign-currency translations did not have any material impact on the same.

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Segmental Discussion

Revenues from the Life Sciences segment totaled $1.78 billion, up 4.5% year over year. We expected the segment’s revenues to be $1.75 billion. Core sales fell 2% year over year. Acquisitions had a positive impact of 7% on segmental sales, while foreign-currency translations had a negative impact of 0.5%. Adjusted operating profit was $404 million, down 3.1% year over year. 

Revenues from the Diagnostics segment totaled $2.36 billion, up 5% year over year. Our estimate for revenues was $2.21 billion. Core sales increased 5% year over year, while foreign currency had no impact on sales. Adjusted operating profit was $664 million, up 12.9% on a year-over-year basis.

Revenues from the Biotechnology segment totaled $1.65 billion, down 0.5% year over year. Our estimate was $1.62 billion. Core sales remained flat year over year, while foreign-currency translations had an adverse impact of 0.5%. Adjusted operating profit was $608 million, down 3.6% year over year.

Margin Profile

In the third quarter, Danaher’s cost of sales increased 2% year over year to $2.4 billion. Gross profit of $3.4 billion increased 3.8% year over year. The gross margin was 58.7% compared with 58.2% in the year-ago quarter.

Selling, general and administrative expenses of $2.06 billion recorded an increase of 19.2% on a year-over-year basis. Research and development expenses were $383 million, up 5.7% year over year.

Danaher’s operating profit decreased 19.2% year over year to $958 million. Operating margin contracted to 16.5% from 21.1% in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting the third quarter, DHR had cash and equivalents of $2.6 billion compared with $5.9 billion in 2023-end. Long-term debt was $16.3 billion at the end of the quarter compared with $16.7 billion at the end of December 2023.

Danaher generated net cash of $4.7 billion from operating activities in the first nine months of 2024 compared with $5.5 billion in the previous year’s comparable period. Capital expenditures totaled $876 million in the same period, down 7.7% year over year. Adjusted free cash flow declined 4% year over year to $3.81 billion in the first nine months of 2024.

In the same period, DHR paid out dividends of $573 million, down around 7.7% on a year-over-year basis.

Outlook

For the fourth quarter, Danaher expects adjusted core sales from continuing operations to decline in low-single digits on a year-over-year basis.

The same is also anticipated to decrease in low-single digits on a year-over-year basis in 2024.

Zacks Rank & Stocks to Consider

Danaher presently carries a Zacks Rank #4 (Sell). Some better-ranked companies are discussed below:

Markel Group Inc. MKL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MKL delivered a trailing four-quarter average earnings surprise of 35.4%. In the past 60 days, the Zacks Consensus Estimate for Markel’s 2024 earnings has increased 1.8%.

Allegion plc ALLE presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.3%.

In the past 60 days, the Zacks Consensus Estimate for ALLE’s 2024 earnings has remained steady.

Parker-Hannifin Corporation PH currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 11.2%.

In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 (ending June 2025) earnings has increased 0.3%.

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