Intrinsic value of Danaher - DHR

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$85.66

  Intrinsic Value

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  Value-price divergence*

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$85.66

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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 59.0

 

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
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
Revenue, $m
  16,882
  17,895
  18,951
  20,052
  21,201
  22,400
  23,652
  24,960
  26,328
  27,757
  29,253
  30,817
  32,455
  34,169
  35,965
  37,845
  39,815
  41,880
  44,044
  46,312
  48,690
  51,184
  53,799
  56,542
  59,419
  62,438
  65,604
  68,927
  72,413
  76,072
  79,911
Variable operating expenses, $m
 
  14,764
  15,494
  16,256
  17,051
  17,880
  18,747
  19,652
  20,598
  21,587
  22,622
  21,321
  22,454
  23,640
  24,883
  26,184
  27,547
  28,975
  30,472
  32,041
  33,687
  35,412
  37,221
  39,119
  41,110
  43,198
  45,389
  47,688
  50,100
  52,631
  55,288
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
  15,032
  15,768
  16,537
  17,339
  18,175
  19,050
  19,962
  20,916
  21,913
  22,956
  21,663
  22,805
  24,000
  25,252
  26,562
  27,934
  29,372
  30,879
  32,458
  34,115
  35,850
  37,670
  39,580
  41,582
  43,682
  45,885
  48,196
  50,621
  53,165
  55,835
Operating income, $m
  2,572
  2,864
  3,183
  3,515
  3,862
  4,224
  4,603
  4,998
  5,412
  5,844
  6,297
  9,154
  9,650
  10,169
  10,713
  11,284
  11,881
  12,508
  13,164
  13,853
  14,576
  15,333
  16,128
  16,962
  17,837
  18,756
  19,719
  20,731
  21,792
  22,907
  24,076
EBITDA, $m
  3,700
  5,724
  6,071
  6,432
  6,810
  7,204
  7,616
  8,047
  8,497
  8,967
  9,460
  9,975
  10,515
  11,080
  11,672
  12,293
  12,943
  13,624
  14,339
  15,088
  15,874
  16,698
  17,563
  18,470
  19,422
  20,421
  21,469
  22,569
  23,723
  24,935
  26,207
Interest expense (income), $m
  212
  396
  440
  487
  535
  586
  639
  694
  752
  813
  876
  942
  1,011
  1,083
  1,159
  1,238
  1,321
  1,408
  1,500
  1,595
  1,696
  1,801
  1,911
  2,026
  2,148
  2,275
  2,408
  2,548
  2,695
  2,849
  3,011
Earnings before tax, $m
  2,611
  2,468
  2,743
  3,028
  3,327
  3,638
  3,964
  4,304
  4,660
  5,032
  5,421
  8,212
  8,639
  9,086
  9,554
  10,045
  10,560
  11,099
  11,665
  12,258
  12,880
  13,533
  14,217
  14,936
  15,690
  16,481
  17,311
  18,183
  19,097
  20,058
  21,066
Tax expense, $m
  458
  666
  741
  818
  898
  982
  1,070
  1,162
  1,258
  1,359
  1,464
  2,217
  2,332
  2,453
  2,580
  2,712
  2,851
  2,997
  3,149
  3,310
  3,478
  3,654
  3,839
  4,033
  4,236
  4,450
  4,674
  4,909
  5,156
  5,416
  5,688
Net income, $m
  2,554
  1,802
  2,002
  2,211
  2,428
  2,656
  2,894
  3,142
  3,402
  3,673
  3,958
  5,995
  6,306
  6,633
  6,975
  7,333
  7,709
  8,102
  8,515
  8,948
  9,402
  9,879
  10,379
  10,903
  11,453
  12,031
  12,637
  13,273
  13,941
  14,642
  15,378

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
  46,968
  49,739
  52,629
  55,644
  58,792
  62,078
  65,512
  69,101
  72,854
  76,779
  80,885
  85,183
  89,683
  94,395
  99,331
  104,502
  109,921
  115,600
  121,554
  127,796
  134,341
  141,205
  148,404
  155,956
  163,878
  172,190
  180,910
  190,061
  199,664
  209,741
Adjusted assets (=assets-cash), $m
  44,331
  46,968
  49,739
  52,629
  55,644
  58,792
  62,078
  65,512
  69,101
  72,854
  76,779
  80,885
  85,183
  89,683
  94,395
  99,331
  104,502
  109,921
  115,600
  121,554
  127,796
  134,341
  141,205
  148,404
  155,956
  163,878
  172,190
  180,910
  190,061
  199,664
  209,741
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
  14,316
  15,161
  16,041
  16,960
  17,920
  18,922
  19,968
  21,062
  22,206
  23,402
  24,654
  25,964
  27,335
  28,772
  30,276
  31,852
  33,504
  35,235
  37,050
  38,952
  40,947
  43,039
  45,234
  47,535
  49,950
  52,483
  55,141
  57,931
  60,857
  63,929
Working capital, $m
  -209
  1,503
  1,592
  1,684
  1,781
  1,882
  1,987
  2,097
  2,212
  2,332
  2,457
  2,589
  2,726
  2,870
  3,021
  3,179
  3,344
  3,518
  3,700
  3,890
  4,090
  4,299
  4,519
  4,750
  4,991
  5,245
  5,511
  5,790
  6,083
  6,390
  6,713
Total debt, $m
  12,269
  12,569
  13,902
  15,292
  16,742
  18,256
  19,837
  21,488
  23,215
  25,020
  26,908
  28,883
  30,950
  33,115
  35,381
  37,755
  40,243
  42,849
  45,581
  48,444
  51,447
  54,595
  57,897
  61,359
  64,992
  68,802
  72,800
  76,995
  81,396
  86,015
  90,862
Total liabilities, $m
  22,293
  22,592
  23,925
  25,315
  26,765
  28,279
  29,860
  31,511
  33,238
  35,043
  36,931
  38,906
  40,973
  43,138
  45,404
  47,778
  50,266
  52,872
  55,604
  58,467
  61,470
  64,618
  67,920
  71,382
  75,015
  78,825
  82,823
  87,018
  91,419
  96,038
  100,885
Total equity, $m
  23,003
  24,377
  25,815
  27,315
  28,879
  30,513
  32,219
  34,001
  35,864
  37,811
  39,848
  41,980
  44,210
  46,546
  48,991
  51,553
  54,237
  57,049
  59,997
  63,086
  66,326
  69,723
  73,285
  77,022
  80,941
  85,053
  89,366
  93,892
  98,642
  103,625
  108,855
Total liabilities and equity, $m
  45,296
  46,969
  49,740
  52,630
  55,644
  58,792
  62,079
  65,512
  69,102
  72,854
  76,779
  80,886
  85,183
  89,684
  94,395
  99,331
  104,503
  109,921
  115,601
  121,553
  127,796
  134,341
  141,205
  148,404
  155,956
  163,878
  172,189
  180,910
  190,061
  199,663
  209,740
Debt-to-equity ratio
  0.533
  0.520
  0.540
  0.560
  0.580
  0.600
  0.620
  0.630
  0.650
  0.660
  0.680
  0.690
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.780
  0.790
  0.800
  0.800
  0.810
  0.810
  0.820
  0.830
  0.830
  0.830
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
  1,802
  2,002
  2,211
  2,428
  2,656
  2,894
  3,142
  3,402
  3,673
  3,958
  5,995
  6,306
  6,633
  6,975
  7,333
  7,709
  8,102
  8,515
  8,948
  9,402
  9,879
  10,379
  10,903
  11,453
  12,031
  12,637
  13,273
  13,941
  14,642
  15,378
Depreciation, amort., depletion, $m
  1,128
  2,860
  2,888
  2,917
  2,948
  2,980
  3,013
  3,048
  3,085
  3,123
  3,163
  822
  865
  911
  959
  1,009
  1,062
  1,117
  1,174
  1,235
  1,298
  1,365
  1,435
  1,508
  1,585
  1,665
  1,749
  1,838
  1,931
  2,029
  2,131
Funds from operations, $m
  3,627
  4,662
  4,890
  5,128
  5,377
  5,636
  5,907
  6,190
  6,486
  6,796
  7,120
  6,816
  7,172
  7,544
  7,934
  8,342
  8,770
  9,219
  9,690
  10,183
  10,701
  11,244
  11,813
  12,411
  13,038
  13,696
  14,387
  15,111
  15,872
  16,671
  17,509
Change in working capital, $m
  105
  85
  89
  92
  96
  101
  105
  110
  115
  120
  126
  131
  138
  144
  151
  158
  165
  173
  182
  191
  200
  209
  220
  230
  242
  254
  266
  279
  293
  307
  323
Cash from operations, $m
  3,522
  5,239
  4,801
  5,036
  5,280
  5,535
  5,802
  6,080
  6,372
  6,676
  6,995
  6,685
  7,034
  7,400
  7,783
  8,184
  8,605
  9,046
  9,508
  9,993
  10,501
  11,034
  11,594
  12,181
  12,796
  13,442
  14,121
  14,832
  15,579
  16,363
  17,186
Maintenance CAPEX, $m
  0
  -450
  -477
  -505
  -535
  -565
  -597
  -631
  -666
  -702
  -740
  -780
  -822
  -865
  -911
  -959
  -1,009
  -1,062
  -1,117
  -1,174
  -1,235
  -1,298
  -1,365
  -1,435
  -1,508
  -1,585
  -1,665
  -1,749
  -1,838
  -1,931
  -2,029
New CAPEX, $m
  -590
  -806
  -845
  -881
  -919
  -959
  -1,002
  -1,047
  -1,094
  -1,144
  -1,196
  -1,252
  -1,310
  -1,372
  -1,436
  -1,504
  -1,576
  -1,652
  -1,731
  -1,815
  -1,903
  -1,995
  -2,092
  -2,194
  -2,302
  -2,415
  -2,533
  -2,658
  -2,789
  -2,927
  -3,072
Cash from investing activities, $m
  -5,243
  -1,256
  -1,322
  -1,386
  -1,454
  -1,524
  -1,599
  -1,678
  -1,760
  -1,846
  -1,936
  -2,032
  -2,132
  -2,237
  -2,347
  -2,463
  -2,585
  -2,714
  -2,848
  -2,989
  -3,138
  -3,293
  -3,457
  -3,629
  -3,810
  -4,000
  -4,198
  -4,407
  -4,627
  -4,858
  -5,101
Free cash flow, $m
  -1,721
  3,982
  3,480
  3,649
  3,826
  4,011
  4,203
  4,403
  4,612
  4,830
  5,058
  4,653
  4,902
  5,163
  5,435
  5,721
  6,020
  6,332
  6,660
  7,004
  7,364
  7,741
  8,137
  8,552
  8,987
  9,443
  9,922
  10,425
  10,952
  11,505
  12,086
Issuance/(repayment) of debt, $m
  2,978
  1,264
  1,333
  1,390
  1,450
  1,514
  1,581
  1,652
  1,726
  1,805
  1,888
  1,975
  2,067
  2,164
  2,267
  2,374
  2,487
  2,606
  2,732
  2,864
  3,002
  3,148
  3,302
  3,463
  3,632
  3,811
  3,998
  4,195
  4,401
  4,619
  4,847
Issuance/(repurchase) of shares, $m
  165
  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 from financing (excl. dividends), $m  
  2,443
  1,264
  1,333
  1,390
  1,450
  1,514
  1,581
  1,652
  1,726
  1,805
  1,888
  1,975
  2,067
  2,164
  2,267
  2,374
  2,487
  2,606
  2,732
  2,864
  3,002
  3,148
  3,302
  3,463
  3,632
  3,811
  3,998
  4,195
  4,401
  4,619
  4,847
Total cash flow (excl. dividends), $m
  573
  5,246
  4,813
  5,039
  5,277
  5,524
  5,784
  6,055
  6,338
  6,635
  6,946
  6,628
  6,970
  7,327
  7,702
  8,095
  8,507
  8,939
  9,392
  9,867
  10,366
  10,889
  11,438
  12,014
  12,619
  13,254
  13,920
  14,619
  15,354
  16,124
  16,933
Retained Cash Flow (-), $m
  687
  -1,374
  -1,438
  -1,500
  -1,565
  -1,633
  -1,706
  -1,782
  -1,863
  -1,948
  -2,037
  -2,131
  -2,231
  -2,335
  -2,446
  -2,562
  -2,684
  -2,812
  -2,948
  -3,090
  -3,240
  -3,397
  -3,562
  -3,736
  -3,919
  -4,112
  -4,314
  -4,526
  -4,749
  -4,984
  -5,230
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
 
  3,873
  3,374
  3,540
  3,712
  3,891
  4,078
  4,272
  4,476
  4,688
  4,909
  4,497
  4,739
  4,992
  5,256
  5,533
  5,823
  6,126
  6,444
  6,777
  7,126
  7,492
  7,876
  8,278
  8,700
  9,142
  9,606
  10,093
  10,604
  11,141
  11,703
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
 
  3,653
  2,986
  2,921
  2,837
  2,737
  2,619
  2,486
  2,340
  2,183
  2,016
  1,612
  1,467
  1,320
  1,172
  1,027
  888
  756
  634
  523
  423
  337
  263
  201
  150
  110
  78
  55
  37
  24
  16
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. The company’s Life Sciences segment provides laser scanning, compound, and surgical and other stereo microscopes. This segment also offers filtration, separation, and purification technologies to the biopharmaceutical, food and beverage, medical, aerospace, microelectronics, and general industrial sectors. Its Diagnostics segment provides chemistry, immunoassay, microbiology, and automation systems, as well as hematology and flow cytometry products. The company offers analytical instruments, reagents, consumables, software, and services for hospitals, physicians' offices, reference laboratories, and other critical care settings. Its Dental segment provides consumables, equipment, and services to diagnose, treat, and prevent disease and ailments of the teeth, gums, and supporting bone. The company’s products comprise implant systems, dental prosthetics, and associated treatment planning software; orthodontic bracket systems and lab products; endodontic systems and related consumables; restorative materials and instruments; infection prevention products; digital imaging systems and software; air and electric powered handpieces, and consumables; and treatment units. Its Environmental & Applied Solutions segment offers instrumentation, services, and disinfection systems to analyze, treat, and manage water in residential, commercial, industrial, and natural resource applications. This segment also provides equipment, consumables, software, and services for various printing, marking, coding, traceability, packaging, design, and color management applications on consumer, pharmaceutical, and industrial products. The company was formerly known as Diversified Mortgage Investors, Inc. and changed its name to Danaher Corporation in 1984. Danaher Corporation was founded in 1969 and is headquartered in Washington, the District of Columbia.

FINANCIAL RATIOS  of  Danaher (DHR)

Valuation Ratios
P/E Ratio 23.2
Price to Sales 3.5
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 16.8
Price to Free Cash Flow 20.2
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 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 688.632 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 $59.0 billion.


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COMPANY NEWS

▶ ETFs with exposure to Danaher Corp. : June 15, 2017   [Jun-15-17 01:43PM  Capital Cube]
▶ Danaher Corp. Value Analysis (NYSE:DHR) : May 30, 2017   [May-30-17 01:03PM  Capital Cube]
▶ ETFs with exposure to Danaher Corp. : May 29, 2017   [May-29-17 12:45PM  Capital Cube]
▶ 3 Top Dividend Stocks in the Dentistry Industry   [May-23-17 05:42PM  Motley Fool]
▶ ETFs with exposure to Danaher Corp. : May 18, 2017   [May-18-17 01:40PM  Capital Cube]
▶ [$$] Bain Taps Former Chief of Danaher for Industrials Team   [04:09PM  The Wall Street Journal]
▶ Danaher Announces Quarterly Dividend   [May-09-17 04:15PM  PR Newswire]
▶ ETFs with exposure to Danaher Corp. : May 5, 2017   [May-05-17 04:03PM  Capital Cube]
▶ 5 Key Takeaways From Danaher Corporation's Earnings   [May-04-17 02:35PM  Motley Fool]
▶ 5 Stocks Jim Cramer Likes for the Next 3 Months   [Apr-27-17 03:57PM  TheStreet.com]
▶ ETFs with exposure to Danaher Corp. : April 25, 2017   [Apr-25-17 03:30PM  Capital Cube]
▶ Danaher beats Street 1Q forecasts   [06:08AM  Associated Press]
▶ Should You Buy Danaher (DHR) Ahead of Earnings?   [Apr-18-17 08:55AM  Zacks]
▶ A Socially Conscious Guru   [Apr-07-17 06:56PM  GuruFocus.com]
▶ ETFs with exposure to Danaher Corp. : April 5, 2017   [Apr-05-17 04:37PM  Capital Cube]
▶ Danaher Stock Trades Ex-Dividend Wednesday   [Mar-28-17 08:47AM  Investopedia]
▶ Heres where these D.C.-area billionaires rank on Forbes 2017 list   [Mar-21-17 03:20PM  at bizjournals.com]
▶ Heres where these D.C.-area billionaires rank on Forbes 2017 list   [03:20PM  American City Business Journals]
▶ How to trade deregulation: 6 stocks   [Mar-16-17 05:00PM  CNBC Videos]
▶ Better Buy: Danaher Corporation vs. Fortive Corp   [Mar-09-17 09:51AM  Motley Fool]
▶ 5 Companies Hit 52-Week Highs   [Mar-07-17 12:47PM  GuruFocus.com]
▶ Danaher Announces Quarterly Dividend   [Feb-21-17 04:15PM  PR Newswire]
▶ ATS Automation appoints new Chief Executive Officer   [Feb-08-17 06:01AM  CNW Group]
▶ Locust Wood Boosts Exposure to These Companies   [Feb-06-17 01:30PM  at Insider Monkey]
▶ Danaher To Present At J.P. Morgan Healthcare Conference   [Jan-04-17 04:15PM  PR Newswire]
▶ Is Danaher Corporation Stock a Buy for 2017?   [Dec-27-16 01:22PM  at Motley Fool]
▶ Danaher Does It   [11:03AM  at Barrons.com]
▶ Danaher Initiates 2017 Outlook   [06:00AM  PR Newswire]
▶ 4 Industrial Stock Winners From Trump's Lower Taxes   [Dec-13-16 03:05PM  at Barrons.com]
Stock chart of DHR Financial statements of DHR Annual reports 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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