Zacks_Analysts' Blog : Danaher Underperforms Estimate - Analyst Blog

Danaher Corporation (DHR) released its second-quarter 2011 results before the opening bell today reporting earnings from continuing operations of 65 cents, below the Zacks Consensus Estimate of 67 cents. Earnings for the quarter were up 23% compared with the prior-year quarter.

Adjusted diluted earnings from continuing operations, which excludes contribution from Beckman Coulter, was 69 cents, an increase of 28% year over year.

Revenue

The company generated sales from continuing operations for 2011 of $3.7 billion, an increase of 15.5% year over year. Core revenue for the quarter was up 7.5%. Danaher continues to benefit from product innovations and its go-to-market initiatives. Efforts of Danaher are leading to organic growth and expanding margins.

Test & Measurement revenue was $848.2 million compared with $682.2 million in the prior-year quarter, Environmental revenue was $730.6 million compared with $696.0 million, Life Sciences & Diagnostics revenue was $704.8 million compared with $540.1 million, Dental revenue was $504.7 million compared with $428.3 million and Industrial Technologies revenue was $923.4 million compared with $698.5 million.

Margin

Operating profit in the quarter was $626.1 million compared with $517.8 million.

Operating margin in Test & Measurement was 22.4%, Environmental was 21.7%, Life Sciences & Diagnostics was 4.9%, Dental was 10.9% and Industrial Technologies was 21.7%.

Balance Sheet and Cash Flow

Cash and cash equivalents at the end of the quarter was $551.6 million with long-term debt of $6.5 billion and total shareholders equity of $16.6 billion.

Net cash flows from operating activities were $1.1 billion compared with $931.8 million in prior-year quarter.

Outlook

The company expects to derive continued benefit from its new product investments as well as its increased penetration in the emerging markets. Further, Beckman Coulter acquisition is also expected to be a major contributor in 2011 and beyond.

Danaher Corporation is a diversified technology company that designs, manufactures and markets innovative products and services, which are typically characterized by strong brand names, proprietary technology and major market positions. Major Competitors of the company are General Electric Co. (GE) and SPX Corporation (SPW).

We maintain a Zacks #1 Rank (short-term Strong Buy recommendation) on Danaher Corporation.