On April 21, 2022 I published my Danaher (DHR) - Creating Long-Term Shareholder Value post. In that post, I touch upon why I deem it to be an attractive long-term investment. I conclude by stating my intent to acquire additional shares even though its valuation is slightly less attractive than at the time of my February 17, 2022 purchase at $268.25/share.
As luck would have it, DHR was caught in a broad market pullback on April 22nd!
Valuation
When I wrote my April 21, 2022 post, DHR's share price was $278.55. This share price and the forward adjusted diluted EPS estimates from the brokers which cover DHR resulted in the following forward adjusted diluted PE levels:
- FY2022 - 23 brokers - mean of $10.45 and low/high of $9.99 - $10.61. Using the mean estimate, the forward adjusted diluted PE is ~26.7.
- FY2023 - 22 brokers - mean of $10.98 and low/high of $10.20 - $11.60. Using the mean estimate, the forward adjusted diluted PE is ~25.4.
- FY2024 - 10 brokers - mean of $12.24 and low/high of $11.71 - $13.40. Using the mean estimate, the forward adjusted diluted PE is ~22.8.
Since Q1 2022 results had just been released on April 21, I expected these estimates to be revised over the coming days.
On April 22, I acquired additional shares at $266.84. Using this purchase price and current broker estimates, the forward adjusted diluted PE levels are now:
- FY2022 - 23 brokers - mean of $10.39 and low/high of $9.99 - $10.95. Using the mean estimate, the forward adjusted diluted PE is ~25.7.
- FY2023 - 22 brokers - mean of $10.95 and low/high of $10.20 - $11.60. Using the mean estimate, the forward adjusted diluted PE is ~24.4.
- FY2024 - 11 brokers - mean of $12.16 and low/high of $11.61 - $13.40. Using the mean estimate, the forward adjusted diluted PE is ~22.
Final Thoughts
While DHR's quarterly results can experience volatility, let us not lose sight that this is a company that has grown from ~$13B in annual revenue in FY2014 to ~$29.5B in FY2021!
I am certain Steven and Mitchell Rales, the co-founders of DHR, and members of senior management focus on building the business for the long term.
The Rales have a substantial stake in DHR and they both serve on DHR's Board. On the Forbes 2022 World's Billionaires List, Steven is ranked #252 with a Net Worth of ~$8.7B and Mitchell is ranked #441 with a Net Worth of ~$5.9B; this list is updated in real-time.
Given their proven track record at creating wealth, I suggest investors 'follow the money'.
Furthermore, investors would be wise to heed the advice Ben Graham once provided Warren Buffett when Buffett worked for Graham-Newman:
'In the short run, the market is a voting machine. In the long run, it is a weighing machine. People have been successful investors because they've stuck with successful companies. Sooner or later the market mirrors the business.'
Keeping this advice in mind, on April 22 I acquired another 25 shares at ~$266.84.
I wish you much success on your journey to financial freedom!
Note: Please send any feedback, corrections, or questions to [email protected].
Disclosure: I am long DHR.
Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation.
I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.
