Intrinsic value of Danaher - DHR

Previous Close

$86.13

  Intrinsic Value

$67.96

stock screener

  Rating & Target

sell

-21%

  Value-price divergence*

-9%

Previous close

$86.13

 
Intrinsic value

$67.96

 
Up/down potential

-21%

 
Rating

sell

 
Value-price divergence*

-9%

*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 60.1

 

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
  17.00
  15.80
  14.72
  13.75
  12.87
  12.09
  11.38
  10.74
  10.17
  9.65
  9.18
  8.77
  8.39
  8.05
  7.75
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
Revenue, $m
  16,882
  19,752
  22,873
  26,240
  29,847
  33,689
  37,761
  42,057
  46,574
  51,308
  56,259
  61,426
  66,811
  72,415
  78,245
  84,305
  90,603
  97,148
  103,950
  111,020
  118,370
  126,016
  133,971
  142,253
  150,878
  159,867
  169,237
  179,011
  189,211
  199,860
  210,982
Variable operating expenses, $m
 
  16,048
  18,207
  20,537
  23,033
  25,691
  28,508
  31,480
  34,605
  37,881
  41,306
  42,498
  46,224
  50,101
  54,135
  58,328
  62,685
  67,213
  71,919
  76,810
  81,896
  87,185
  92,689
  98,419
  104,387
  110,606
  117,089
  123,851
  130,908
  138,275
  145,970
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
  16,316
  18,481
  20,818
  23,321
  25,986
  28,811
  31,790
  34,923
  38,207
  41,640
  42,840
  46,575
  50,461
  54,504
  58,706
  63,072
  67,610
  72,326
  77,227
  82,324
  87,623
  93,138
  98,880
  104,859
  111,090
  117,585
  124,359
  131,429
  138,809
  146,517
Operating income, $m
  2,572
  3,436
  4,391
  5,422
  6,526
  7,703
  8,950
  10,266
  11,651
  13,101
  14,619
  18,585
  20,236
  21,954
  23,742
  25,600
  27,531
  29,538
  31,624
  33,792
  36,047
  38,392
  40,832
  43,373
  46,019
  48,777
  51,652
  54,652
  57,782
  61,050
  64,464
EBITDA, $m
  3,700
  6,346
  7,384
  8,504
  9,705
  10,984
  12,340
  13,771
  15,275
  16,852
  18,502
  20,223
  22,017
  23,885
  25,828
  27,848
  29,947
  32,129
  34,396
  36,753
  39,203
  41,752
  44,405
  47,166
  50,043
  53,040
  56,165
  59,425
  62,828
  66,380
  70,090
Interest expense (income), $m
  212
  396
  522
  660
  809
  968
  1,138
  1,318
  1,508
  1,707
  1,916
  2,135
  2,363
  2,601
  2,849
  3,107
  3,374
  3,653
  3,942
  4,242
  4,555
  4,880
  5,217
  5,569
  5,935
  6,316
  6,713
  7,127
  7,559
  8,010
  8,480
Earnings before tax, $m
  2,611
  3,040
  3,869
  4,762
  5,718
  6,735
  7,812
  8,949
  10,143
  11,394
  12,702
  16,450
  17,872
  19,353
  20,893
  22,493
  24,157
  25,885
  27,682
  29,550
  31,492
  33,512
  35,615
  37,804
  40,085
  42,461
  44,939
  47,525
  50,223
  53,041
  55,984
Tax expense, $m
  458
  821
  1,045
  1,286
  1,544
  1,818
  2,109
  2,416
  2,739
  3,076
  3,430
  4,442
  4,826
  5,225
  5,641
  6,073
  6,522
  6,989
  7,474
  7,978
  8,503
  9,048
  9,616
  10,207
  10,823
  11,465
  12,134
  12,832
  13,560
  14,321
  15,116
Net income, $m
  2,554
  2,220
  2,824
  3,476
  4,174
  4,917
  5,703
  6,533
  7,404
  8,318
  9,273
  12,009
  13,047
  14,128
  15,252
  16,420
  17,634
  18,896
  20,208
  21,571
  22,989
  24,464
  25,999
  27,597
  29,262
  30,997
  32,806
  34,693
  36,663
  38,720
  40,868

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
  51,842
  60,033
  68,870
  78,339
  88,423
  99,110
  110,386
  122,241
  134,668
  147,662
  161,223
  175,356
  190,067
  205,367
  221,274
  237,804
  254,982
  272,834
  291,390
  310,683
  330,750
  351,630
  373,367
  396,006
  419,597
  444,192
  469,845
  496,616
  524,566
  553,759
Adjusted assets (=assets-cash), $m
  44,331
  51,842
  60,033
  68,870
  78,339
  88,423
  99,110
  110,386
  122,241
  134,668
  147,662
  161,223
  175,356
  190,067
  205,367
  221,274
  237,804
  254,982
  272,834
  291,390
  310,683
  330,750
  351,630
  373,367
  396,006
  419,597
  444,192
  469,845
  496,616
  524,566
  553,759
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
  15,802
  18,298
  20,992
  23,878
  26,951
  30,209
  33,646
  37,259
  41,047
  45,007
  49,141
  53,448
  57,932
  62,596
  67,444
  72,483
  77,719
  83,160
  88,816
  94,696
  100,813
  107,177
  113,802
  120,703
  127,893
  135,390
  143,209
  151,369
  159,888
  168,786
Working capital, $m
  -209
  1,659
  1,921
  2,204
  2,507
  2,830
  3,172
  3,533
  3,912
  4,310
  4,726
  5,160
  5,612
  6,083
  6,573
  7,082
  7,611
  8,160
  8,732
  9,326
  9,943
  10,585
  11,254
  11,949
  12,674
  13,429
  14,216
  15,037
  15,894
  16,788
  17,723
Total debt, $m
  12,269
  14,913
  18,853
  23,104
  27,658
  32,509
  37,649
  43,073
  48,775
  54,752
  61,002
  67,525
  74,323
  81,399
  88,759
  96,410
  104,361
  112,623
  121,210
  130,136
  139,416
  149,068
  159,111
  169,567
  180,456
  191,803
  203,633
  215,973
  228,849
  242,293
  256,335
Total liabilities, $m
  22,293
  24,936
  28,876
  33,127
  37,681
  42,532
  47,672
  53,096
  58,798
  64,775
  71,025
  77,548
  84,346
  91,422
  98,782
  106,433
  114,384
  122,646
  131,233
  140,159
  149,439
  159,091
  169,134
  179,590
  190,479
  201,826
  213,656
  225,996
  238,872
  252,316
  266,358
Total equity, $m
  23,003
  26,906
  31,157
  35,744
  40,658
  45,892
  51,438
  57,290
  63,443
  69,893
  76,637
  83,675
  91,010
  98,645
  106,586
  114,841
  123,420
  132,336
  141,601
  151,231
  161,245
  171,659
  182,496
  193,777
  205,527
  217,771
  230,536
  243,850
  257,744
  272,250
  287,401
Total liabilities and equity, $m
  45,296
  51,842
  60,033
  68,871
  78,339
  88,424
  99,110
  110,386
  122,241
  134,668
  147,662
  161,223
  175,356
  190,067
  205,368
  221,274
  237,804
  254,982
  272,834
  291,390
  310,684
  330,750
  351,630
  373,367
  396,006
  419,597
  444,192
  469,846
  496,616
  524,566
  553,759
Debt-to-equity ratio
  0.533
  0.550
  0.610
  0.650
  0.680
  0.710
  0.730
  0.750
  0.770
  0.780
  0.800
  0.810
  0.820
  0.830
  0.830
  0.840
  0.850
  0.850
  0.860
  0.860
  0.860
  0.870
  0.870
  0.880
  0.880
  0.880
  0.880
  0.890
  0.890
  0.890
  0.890
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
  2,220
  2,824
  3,476
  4,174
  4,917
  5,703
  6,533
  7,404
  8,318
  9,273
  12,009
  13,047
  14,128
  15,252
  16,420
  17,634
  18,896
  20,208
  21,571
  22,989
  24,464
  25,999
  27,597
  29,262
  30,997
  32,806
  34,693
  36,663
  38,720
  40,868
Depreciation, amort., depletion, $m
  1,128
  2,909
  2,993
  3,082
  3,179
  3,281
  3,390
  3,504
  3,625
  3,751
  3,883
  1,638
  1,782
  1,931
  2,087
  2,248
  2,416
  2,591
  2,772
  2,961
  3,157
  3,360
  3,573
  3,793
  4,023
  4,263
  4,513
  4,774
  5,046
  5,330
  5,626
Funds from operations, $m
  3,627
  5,129
  5,817
  6,559
  7,352
  8,198
  9,093
  10,037
  11,029
  12,069
  13,156
  13,647
  14,829
  16,059
  17,338
  18,668
  20,050
  21,487
  22,980
  24,532
  26,146
  27,824
  29,571
  31,390
  33,285
  35,260
  37,319
  39,467
  41,708
  44,049
  46,495
Change in working capital, $m
  105
  241
  262
  283
  303
  323
  342
  361
  379
  398
  416
  434
  452
  471
  490
  509
  529
  550
  571
  594
  617
  642
  668
  696
  725
  755
  787
  821
  857
  895
  934
Cash from operations, $m
  3,522
  4,888
  5,555
  6,276
  7,049
  7,875
  8,751
  9,676
  10,650
  11,671
  12,740
  13,213
  14,376
  15,588
  16,848
  18,159
  19,521
  20,937
  22,409
  23,938
  25,528
  27,182
  28,903
  30,695
  32,561
  34,505
  36,532
  38,646
  40,852
  43,155
  45,560
Maintenance CAPEX, $m
  0
  -450
  -527
  -610
  -700
  -796
  -898
  -1,007
  -1,122
  -1,242
  -1,368
  -1,500
  -1,638
  -1,782
  -1,931
  -2,087
  -2,248
  -2,416
  -2,591
  -2,772
  -2,961
  -3,157
  -3,360
  -3,573
  -3,793
  -4,023
  -4,263
  -4,513
  -4,774
  -5,046
  -5,330
New CAPEX, $m
  -590
  -2,292
  -2,497
  -2,693
  -2,886
  -3,074
  -3,257
  -3,437
  -3,613
  -3,788
  -3,961
  -4,134
  -4,308
  -4,484
  -4,664
  -4,848
  -5,039
  -5,236
  -5,441
  -5,656
  -5,881
  -6,116
  -6,364
  -6,625
  -6,900
  -7,191
  -7,496
  -7,819
  -8,160
  -8,519
  -8,898
Cash from investing activities, $m
  -5,243
  -2,742
  -3,024
  -3,303
  -3,586
  -3,870
  -4,155
  -4,444
  -4,735
  -5,030
  -5,329
  -5,634
  -5,946
  -6,266
  -6,595
  -6,935
  -7,287
  -7,652
  -8,032
  -8,428
  -8,842
  -9,273
  -9,724
  -10,198
  -10,693
  -11,214
  -11,759
  -12,332
  -12,934
  -13,565
  -14,228
Free cash flow, $m
  -1,721
  2,146
  2,532
  2,972
  3,464
  4,005
  4,595
  5,232
  5,915
  6,641
  7,411
  7,579
  8,431
  9,322
  10,254
  11,224
  12,235
  13,285
  14,377
  15,510
  16,687
  17,909
  19,178
  20,497
  21,867
  23,291
  24,772
  26,313
  27,918
  29,590
  31,333
Issuance/(repayment) of debt, $m
  2,978
  3,608
  3,940
  4,251
  4,554
  4,851
  5,140
  5,424
  5,702
  5,977
  6,250
  6,523
  6,798
  7,076
  7,360
  7,651
  7,951
  8,263
  8,587
  8,925
  9,280
  9,652
  10,043
  10,455
  10,890
  11,347
  11,830
  12,339
  12,877
  13,444
  14,042
Issuance/(repurchase) of shares, $m
  165
  1,684
  1,427
  1,110
  740
  317
  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
  5,292
  5,367
  5,361
  5,294
  5,168
  5,140
  5,424
  5,702
  5,977
  6,250
  6,523
  6,798
  7,076
  7,360
  7,651
  7,951
  8,263
  8,587
  8,925
  9,280
  9,652
  10,043
  10,455
  10,890
  11,347
  11,830
  12,339
  12,877
  13,444
  14,042
Total cash flow (excl. dividends), $m
  573
  7,438
  7,898
  8,333
  8,758
  9,173
  9,735
  10,656
  11,617
  12,619
  13,661
  14,102
  15,228
  16,398
  17,613
  18,875
  20,186
  21,548
  22,963
  24,436
  25,967
  27,561
  29,222
  30,952
  32,756
  34,638
  36,602
  38,653
  40,795
  43,034
  45,374
Retained Cash Flow (-), $m
  687
  -3,903
  -4,251
  -4,586
  -4,914
  -5,234
  -5,546
  -5,852
  -6,153
  -6,449
  -6,744
  -7,038
  -7,335
  -7,635
  -7,941
  -8,255
  -8,579
  -8,915
  -9,265
  -9,630
  -10,013
  -10,415
  -10,837
  -11,281
  -11,750
  -12,244
  -12,765
  -13,314
  -13,894
  -14,506
  -15,151
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
 
  3,535
  3,647
  3,747
  3,844
  3,939
  4,189
  4,804
  5,464
  6,169
  6,917
  7,064
  7,894
  8,763
  9,672
  10,620
  11,607
  12,632
  13,698
  14,805
  15,954
  17,147
  18,385
  19,671
  21,006
  22,394
  23,837
  25,339
  26,901
  28,528
  30,223
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
 
  3,335
  3,228
  3,092
  2,939
  2,771
  2,690
  2,795
  2,857
  2,872
  2,841
  2,533
  2,444
  2,317
  2,157
  1,972
  1,770
  1,559
  1,347
  1,141
  948
  771
  613
  477
  363
  269
  194
  137
  94
  62
  40
Current shareholders' claim on cash, %
  100
  97.3
  95.3
  94.1
  93.3
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0
  93.0

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 23.3
Price to Sales 3.5
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 16.9
Price to Free Cash Flow 20.3
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 17% 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 697.663 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 $60.1 billion.

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COMPANY NEWS

▶ 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]
▶ ETFs with exposure to Danaher Corp. : July 14, 2017   [Jul-14-17 01:56PM  Capital Cube]
▶ Wells Fargo Sets 'Market Perform' Rating on Danaher   [Jul-13-17 11:24AM  TheStreet.com]
▶ There's More Than Meets the Eye to Danaher Corporation   [Jul-07-17 07:29PM  Motley Fool]
▶ 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]
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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