Intrinsic value of Danaher - DHR

Previous Close

$93.21

  Intrinsic Value

$57.36

stock screener

  Rating & Target

sell

-38%

Previous close

$93.21

 
Intrinsic value

$57.36

 
Up/down potential

-38%

 
Rating

sell

We calculate the intrinsic value of DHR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 64.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.96
  9.60
  9.14
  8.73
  8.35
  8.02
  7.72
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
Revenue, $m
  16,882
  18,503
  20,194
  21,956
  23,790
  25,697
  27,680
  29,741
  31,882
  34,108
  36,421
  38,826
  41,328
  43,932
  46,642
  49,465
  52,406
  55,473
  58,673
  62,011
  65,497
  69,138
  72,943
  76,921
  81,081
  85,432
  89,986
  94,753
  99,744
  104,971
  110,447
Variable operating expenses, $m
 
  15,184
  16,354
  17,573
  18,842
  20,162
  21,534
  22,959
  24,441
  25,981
  27,581
  26,862
  28,593
  30,395
  32,270
  34,223
  36,258
  38,380
  40,593
  42,903
  45,315
  47,834
  50,467
  53,219
  56,097
  59,107
  62,258
  65,556
  69,009
  72,625
  76,414
Fixed operating expenses, $m
 
  268
  274
  281
  288
  295
  303
  310
  318
  326
  334
  342
  351
  360
  369
  378
  387
  397
  407
  417
  428
  438
  449
  461
  472
  484
  496
  508
  521
  534
  547
Total operating expenses, $m
  14,310
  15,452
  16,628
  17,854
  19,130
  20,457
  21,837
  23,269
  24,759
  26,307
  27,915
  27,204
  28,944
  30,755
  32,639
  34,601
  36,645
  38,777
  41,000
  43,320
  45,743
  48,272
  50,916
  53,680
  56,569
  59,591
  62,754
  66,064
  69,530
  73,159
  76,961
Operating income, $m
  2,572
  3,051
  3,566
  4,102
  4,660
  5,240
  5,844
  6,471
  7,124
  7,801
  8,506
  11,621
  12,384
  13,177
  14,003
  14,864
  15,761
  16,696
  17,672
  18,691
  19,755
  20,866
  22,027
  23,242
  24,512
  25,841
  27,232
  28,689
  30,214
  31,812
  33,486
EBITDA, $m
  3,700
  5,927
  6,487
  7,070
  7,677
  8,308
  8,965
  9,647
  10,356
  11,094
  11,860
  12,657
  13,486
  14,349
  15,247
  16,183
  17,158
  18,176
  19,237
  20,344
  21,501
  22,710
  23,972
  25,293
  26,674
  28,119
  29,632
  31,215
  32,874
  34,611
  36,431
Interest expense (income), $m
  212
  396
  467
  541
  619
  700
  785
  872
  963
  1,058
  1,156
  1,259
  1,365
  1,475
  1,590
  1,710
  1,835
  1,965
  2,100
  2,242
  2,389
  2,543
  2,704
  2,872
  3,048
  3,232
  3,424
  3,625
  3,836
  4,057
  4,287
Earnings before tax, $m
  2,611
  2,655
  3,099
  3,560
  4,040
  4,540
  5,059
  5,599
  6,160
  6,743
  7,350
  10,363
  11,019
  11,702
  12,413
  13,154
  13,926
  14,732
  15,572
  16,449
  17,365
  18,323
  19,323
  20,369
  21,464
  22,609
  23,808
  25,063
  26,378
  27,755
  29,198
Tax expense, $m
  458
  717
  837
  961
  1,091
  1,226
  1,366
  1,512
  1,663
  1,821
  1,984
  2,798
  2,975
  3,160
  3,352
  3,552
  3,760
  3,978
  4,204
  4,441
  4,689
  4,947
  5,217
  5,500
  5,795
  6,104
  6,428
  6,767
  7,122
  7,494
  7,883
Net income, $m
  2,554
  1,939
  2,262
  2,599
  2,950
  3,314
  3,693
  4,087
  4,497
  4,923
  5,365
  7,565
  8,044
  8,542
  9,061
  9,602
  10,166
  10,754
  11,367
  12,008
  12,677
  13,375
  14,106
  14,870
  15,669
  16,505
  17,380
  18,296
  19,256
  20,261
  21,315

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  964
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  45,295
  48,563
  53,002
  57,627
  62,441
  67,447
  72,652
  78,061
  83,681
  89,522
  95,594
  101,907
  108,473
  115,306
  122,419
  129,829
  137,550
  145,600
  153,996
  162,760
  171,909
  181,466
  191,452
  201,892
  212,810
  224,231
  236,183
  248,695
  261,795
  275,515
  289,887
Adjusted assets (=assets-cash), $m
  44,331
  48,563
  53,002
  57,627
  62,441
  67,447
  72,652
  78,061
  83,681
  89,522
  95,594
  101,907
  108,473
  115,306
  122,419
  129,829
  137,550
  145,600
  153,996
  162,760
  171,909
  181,466
  191,452
  201,892
  212,810
  224,231
  236,183
  248,695
  261,795
  275,515
  289,887
Revenue / Adjusted assets
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
  0.381
Average production assets, $m
  13,510
  14,802
  16,155
  17,565
  19,032
  20,558
  22,144
  23,793
  25,506
  27,286
  29,137
  31,061
  33,063
  35,145
  37,313
  39,572
  41,925
  44,379
  46,938
  49,609
  52,398
  55,311
  58,355
  61,537
  64,864
  68,346
  71,989
  75,802
  79,795
  83,977
  88,358
Working capital, $m
  -209
  1,554
  1,696
  1,844
  1,998
  2,159
  2,325
  2,498
  2,678
  2,865
  3,059
  3,261
  3,472
  3,690
  3,918
  4,155
  4,402
  4,660
  4,929
  5,209
  5,502
  5,808
  6,127
  6,461
  6,811
  7,176
  7,559
  7,959
  8,378
  8,818
  9,278
Total debt, $m
  12,269
  13,336
  15,471
  17,696
  20,011
  22,419
  24,923
  27,524
  30,228
  33,037
  35,958
  38,994
  42,152
  45,439
  48,861
  52,425
  56,138
  60,010
  64,049
  68,264
  72,665
  77,262
  82,066
  87,087
  92,339
  97,832
  103,581
  109,599
  115,900
  122,499
  129,413
Total liabilities, $m
  22,293
  23,359
  25,494
  27,719
  30,034
  32,442
  34,946
  37,547
  40,251
  43,060
  45,981
  49,017
  52,175
  55,462
  58,884
  62,448
  66,161
  70,033
  74,072
  78,287
  82,688
  87,285
  92,089
  97,110
  102,362
  107,855
  113,604
  119,622
  125,923
  132,522
  139,436
Total equity, $m
  23,003
  25,204
  27,508
  29,908
  32,407
  35,005
  37,706
  40,513
  43,430
  46,462
  49,613
  52,890
  56,297
  59,844
  63,536
  67,381
  71,388
  75,566
  79,924
  84,472
  89,221
  94,181
  99,364
  104,782
  110,448
  116,376
  122,579
  129,072
  135,871
  142,992
  150,451
Total liabilities and equity, $m
  45,296
  48,563
  53,002
  57,627
  62,441
  67,447
  72,652
  78,060
  83,681
  89,522
  95,594
  101,907
  108,472
  115,306
  122,420
  129,829
  137,549
  145,599
  153,996
  162,759
  171,909
  181,466
  191,453
  201,892
  212,810
  224,231
  236,183
  248,694
  261,794
  275,514
  289,887
Debt-to-equity ratio
  0.533
  0.530
  0.560
  0.590
  0.620
  0.640
  0.660
  0.680
  0.700
  0.710
  0.720
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.790
  0.800
  0.810
  0.810
  0.820
  0.830
  0.830
  0.840
  0.840
  0.850
  0.850
  0.850
  0.860
  0.860
Adjusted equity ratio
  0.497
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519
  0.519

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,554
  1,939
  2,262
  2,599
  2,950
  3,314
  3,693
  4,087
  4,497
  4,923
  5,365
  7,565
  8,044
  8,542
  9,061
  9,602
  10,166
  10,754
  11,367
  12,008
  12,677
  13,375
  14,106
  14,870
  15,669
  16,505
  17,380
  18,296
  19,256
  20,261
  21,315
Depreciation, amort., depletion, $m
  1,128
  2,876
  2,921
  2,968
  3,017
  3,068
  3,121
  3,176
  3,233
  3,292
  3,354
  1,035
  1,102
  1,172
  1,244
  1,319
  1,398
  1,479
  1,565
  1,654
  1,747
  1,844
  1,945
  2,051
  2,162
  2,278
  2,400
  2,527
  2,660
  2,799
  2,945
Funds from operations, $m
  3,627
  4,815
  5,183
  5,567
  5,967
  6,382
  6,814
  7,263
  7,730
  8,215
  8,719
  8,600
  9,146
  9,714
  10,305
  10,921
  11,564
  12,233
  12,932
  13,661
  14,423
  15,219
  16,051
  16,921
  17,831
  18,783
  19,779
  20,823
  21,916
  23,060
  24,260
Change in working capital, $m
  105
  136
  142
  148
  154
  160
  167
  173
  180
  187
  194
  202
  210
  219
  228
  237
  247
  258
  269
  280
  293
  306
  320
  334
  349
  366
  383
  400
  419
  439
  460
Cash from operations, $m
  3,522
  4,678
  5,041
  5,419
  5,813
  6,222
  6,648
  7,090
  7,550
  8,028
  8,525
  8,398
  8,936
  9,495
  10,078
  10,684
  11,316
  11,976
  12,663
  13,381
  14,130
  14,913
  15,731
  16,587
  17,481
  18,417
  19,397
  20,422
  21,496
  22,621
  23,800
Maintenance CAPEX, $m
  0
  -450
  -493
  -539
  -585
  -634
  -685
  -738
  -793
  -850
  -910
  -971
  -1,035
  -1,102
  -1,172
  -1,244
  -1,319
  -1,398
  -1,479
  -1,565
  -1,654
  -1,747
  -1,844
  -1,945
  -2,051
  -2,162
  -2,278
  -2,400
  -2,527
  -2,660
  -2,799
New CAPEX, $m
  -590
  -1,292
  -1,353
  -1,410
  -1,467
  -1,526
  -1,586
  -1,649
  -1,713
  -1,780
  -1,851
  -1,924
  -2,001
  -2,083
  -2,168
  -2,258
  -2,353
  -2,454
  -2,559
  -2,671
  -2,789
  -2,913
  -3,044
  -3,182
  -3,328
  -3,481
  -3,643
  -3,813
  -3,993
  -4,182
  -4,381
Cash from investing activities, $m
  -5,243
  -1,742
  -1,846
  -1,949
  -2,052
  -2,160
  -2,271
  -2,387
  -2,506
  -2,630
  -2,761
  -2,895
  -3,036
  -3,185
  -3,340
  -3,502
  -3,672
  -3,852
  -4,038
  -4,236
  -4,443
  -4,660
  -4,888
  -5,127
  -5,379
  -5,643
  -5,921
  -6,213
  -6,520
  -6,842
  -7,180
Free cash flow, $m
  -1,721
  2,936
  3,195
  3,471
  3,760
  4,062
  4,376
  4,703
  5,044
  5,397
  5,765
  5,503
  5,899
  6,310
  6,738
  7,182
  7,644
  8,125
  8,625
  9,145
  9,688
  10,254
  10,844
  11,460
  12,102
  12,774
  13,476
  14,209
  14,977
  15,780
  16,620
Issuance/(repayment) of debt, $m
  2,978
  2,031
  2,135
  2,225
  2,315
  2,408
  2,503
  2,602
  2,703
  2,810
  2,920
  3,037
  3,158
  3,287
  3,422
  3,564
  3,714
  3,872
  4,039
  4,215
  4,401
  4,597
  4,804
  5,022
  5,251
  5,494
  5,749
  6,018
  6,301
  6,599
  6,913
Issuance/(repurchase) of shares, $m
  165
  263
  42
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,443
  2,294
  2,177
  2,225
  2,315
  2,408
  2,503
  2,602
  2,703
  2,810
  2,920
  3,037
  3,158
  3,287
  3,422
  3,564
  3,714
  3,872
  4,039
  4,215
  4,401
  4,597
  4,804
  5,022
  5,251
  5,494
  5,749
  6,018
  6,301
  6,599
  6,913
Total cash flow (excl. dividends), $m
  573
  5,230
  5,372
  5,696
  6,075
  6,470
  6,879
  7,305
  7,747
  8,207
  8,685
  8,539
  9,057
  9,597
  10,159
  10,746
  11,358
  11,997
  12,664
  13,360
  14,089
  14,851
  15,647
  16,481
  17,354
  18,268
  19,225
  20,227
  21,278
  22,379
  23,533
Retained Cash Flow (-), $m
  687
  -2,201
  -2,304
  -2,400
  -2,498
  -2,598
  -2,701
  -2,807
  -2,917
  -3,032
  -3,151
  -3,276
  -3,408
  -3,546
  -3,692
  -3,845
  -4,007
  -4,178
  -4,358
  -4,548
  -4,749
  -4,960
  -5,183
  -5,418
  -5,666
  -5,928
  -6,203
  -6,493
  -6,799
  -7,121
  -7,459
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,029
  3,068
  3,295
  3,577
  3,871
  4,178
  4,498
  4,830
  5,175
  5,534
  5,263
  5,649
  6,051
  6,468
  6,901
  7,351
  7,819
  8,306
  8,812
  9,340
  9,891
  10,464
  11,063
  11,688
  12,340
  13,022
  13,734
  14,479
  15,258
  16,074
Discount rate, %
 
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
 
  2,857
  2,715
  2,719
  2,734
  2,723
  2,684
  2,618
  2,526
  2,410
  2,273
  1,887
  1,749
  1,600
  1,442
  1,281
  1,121
  965
  817
  679
  555
  445
  349
  268
  202
  148
  106
  74
  50
  33
  21
Current shareholders' claim on cash, %
  100
  99.6
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5

Danaher Corporation (Danaher) designs, manufactures and markets professional, medical, industrial and commercial products and services. The Company operates through four segments: Life Sciences, which offers a range of research tools that scientists use to study the basic building blocks of life, including genes, proteins, metabolites and cells, in order to understand the causes of disease, identify new therapies and test new drugs and vaccines; Diagnostics; which offers analytical instruments, reagents, consumables, software and services; Dental, which provides products that are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone, and Environmental & Applied Solutions, which consists of various lines of business, including water quality and product identification. As of December 31, 2016, Danaher's research and development, manufacturing, sales, distribution, service and administrative facilities were located in over 60 countries.

FINANCIAL RATIOS  of  Danaher (DHR)

Valuation Ratios
P/E Ratio 25.3
Price to Sales 3.8
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 18.3
Price to Free Cash Flow 22
Growth Rates
Sales Growth Rate 17%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 15%
Cap. Spend. - 3 Yr. Gr. Rate 1.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 42.1%
Total Debt to Equity 53.3%
Interest Coverage 13
Management Effectiveness
Return On Assets 5.8%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 7.1%
Ret/ On T. Cap. - 3 Yr. Avg. 9.2%
Return On Equity 10.9%
Return On Equity - 3 Yr. Avg. 12.2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 55.4%
Gross Margin - 3 Yr. Avg. 54.3%
EBITDA Margin 23.4%
EBITDA Margin - 3 Yr. Avg. 22.4%
Operating Margin 15.2%
Oper. Margin - 3 Yr. Avg. 15.4%
Pre-Tax Margin 15.5%
Pre-Tax Margin - 3 Yr. Avg. 15.3%
Net Profit Margin 15.1%
Net Profit Margin - 3 Yr. Avg. 19.5%
Effective Tax Rate 17.5%
Eff/ Tax Rate - 3 Yr. Avg. 17.8%
Payout Ratio 15.7%

DHR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DHR stock intrinsic value calculation we used $16882 million for the last fiscal year's total revenue generated by Danaher. The default revenue input number comes from 2016 income statement of Danaher. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DHR stock valuation model: a) initial revenue growth rate of 9.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6%, whose default value for DHR is calculated based on our internal credit rating of Danaher, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Danaher.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DHR stock the variable cost ratio is equal to 83.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $261 million in the base year in the intrinsic value calculation for DHR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Danaher.

Corporate tax rate of 27% is the nominal tax rate for Danaher. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DHR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DHR are equal to 80%.

Life of production assets of 31.9 years is the average useful life of capital assets used in Danaher operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DHR is equal to 8.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $23003 million for Danaher - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 695.561 million for Danaher is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Danaher at the current share price and the inputted number of shares is $64.8 billion.

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COMPANY NEWS

▶ The Top 5 New Buys of the Signature Select Canadian Fund   [Dec-06-17 02:26PM  GuruFocus.com]
▶ Danaher Announces Quarterly Dividend   [Dec-05-17 04:15PM  PR Newswire]
▶ Glenstone to become one of world's largest private museums   [Dec-01-17 08:30PM  American City Business Journals]
▶ [$$] KKR Teams Up With Executive to Buy Industrials Businesses   [Nov-29-17 01:56PM  The Wall Street Journal]
▶ Danaher Announces Leadership Appointment   [Nov-28-17 08:00AM  PR Newswire]
▶ ETFs with exposure to Danaher Corp. : November 20, 2017   [Nov-20-17 12:12PM  Capital Cube]
▶ 3 Reasons to Buy This Dividend Aristocrat Stock   [Nov-12-17 11:33AM  Motley Fool]
▶ Danaher Getting Closer To Key Technical Measure   [03:00AM  Investor's Business Daily]
▶ Danaher to Present at Baird Industrial Conference   [Nov-01-17 04:15PM  PR Newswire]
▶ ETFs with exposure to Danaher Corp. : October 23, 2017   [Oct-23-17 10:32AM  Capital Cube]
▶ Danaher Corporation (DHR): Immense Growth Potential?   [Oct-19-17 10:57AM  Simply Wall St.]
▶ Danaher tops Street 3Q forecasts   [07:00AM  Associated Press]
▶ Should You Sell Danaher (DHR) Before Earnings?   [Oct-18-17 08:42AM  Zacks]
▶ Danaher Announces Quarterly Dividend   [Sep-12-17 04:15PM  PR Newswire]
▶ Danaher leading the IQ100 top gainers   [01:21PM  CNBC Videos]
▶ ETFs with exposure to Danaher Corp. : August 14, 2017   [Aug-14-17 04:29PM  Capital Cube]
▶ Acquisitions and Steady Business Operations Help Danaher   [Aug-06-17 06:00PM  GuruFocus.com]
▶ ETFs with exposure to Danaher Corp. : August 4, 2017   [Aug-03-17 08:11PM  Capital Cube]
▶ ETFs with exposure to Danaher Corp. : July 24, 2017   [Jul-24-17 03:22PM  Capital Cube]
▶ Advanced Micro leading the IQ100   [02:13PM  CNBC Videos]
▶ Danaher tops Street 2Q forecasts   [12:30AM  Associated Press]
▶ So Two Breakup Candidates Walk Into Earnings Day...   [Jul-20-17 12:31PM  Bloomberg]
Financial statements of DHR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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