DHR – Market expectations are for record-high Uniform ROA, but management concerns about their Diagnostics and Dental businesses imply this may be unwarranted

October 27, 2017

  • Danaher Corporation (DHR) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 23.6x Uniform P/E, implying bullish expectations for the firm. However, given management concerns about their Diagnostics and Dental businesses, this may be unwarranted
  • Specifically, management may be downplaying concerns about the health of the Dental industry, and pricing pressure in their Diagnostics business. Should the firm fail to drive Uniform ROA to record-highs, as management sentiment suggests, multiple compression and equity downside would be warranted

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