Danaher Stock: Join the Rally at a 3.8% Discount

Danaher (DHR) stock might be a good buy now. Why? Because you get high margins – reflective of pricing power and cash generation capacity – for a discounted price. Companies like this generate consistent, predictable profits and cash flows, which reduce risk and allow capital to be reinvested. The market tends to reward that.

What Is Happening With DHR

DHR is up 0.04% so far this year, but is actually 3.8% cheaper based on its P/S (Price-to-Sales) ratio compared to 1 year ago.

The stock may not reflect it yet, but here is what’s going well for the company. Danaher’s biotechnology segment drove 6-7% core revenue growth in Q1 2025, fueled by robust demand for biopharmaceutical manufacturing consumables. The company actively mitigates tariff impacts through manufacturing flexibility and pricing strategies. Recent investments in productivity initiatives and breakthrough innovation are set to drive over 100 basis points of adjusted operating profit margin expansion in 2026. This underpins strong cash generation, despite a low-single digit core revenue growth outlook for 2025.

DHR Has Strong Fundamentals

• Recent Profitability: Nearly 26.0% operating cash flow margin and 19.0% operating margin LTM.
• Long-Term Profitability: About 30.3% operating cash flow margin and 21.0% operating margin last 3-year average.
• Revenue Growth: Danaher saw growth of 2.2% LTM and -1.9% last 3-year average, but this is not a growth story
• Available At Discount: At P/S multiple of 5.8, DHR stock is available at a 3.8% discount vs 1 year ago.

Below is a quick comparison of DHR fundamentals with S&P medians.

*LTM: Last Twelve Months

Don’t Expect A Slam Dunk, Though

While DHR stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. DHR fell about 46% in both the Dot-Com bubble and the Global Financial Crisis. The inflation shock caused a roughly 37% drop, while the Covid selloff trimmed around 28%. Even the 2018 correction knocked it down over 13%. The stock isn’t immune to big swings. Solid fundamentals help, but when the market turns sharply, DHR still takes hits.

If you want more details, read Buy or Sell DHR Stock.

How We Arrived At DHR Stock

DHR piqued our interest because it meets the following criteria:

1. Greater than $10 Bil in market cap
2. High CFO (cash flow from operations) margins or operating margins
3. Meaningfully declined in valuation over the past 1 year

But if DHR doesn’t look good enough to you, here are other stocks that also check all these boxes:

1. Eli Lilly (LLY)
2. Visa (V)
3. Salesforce (CRM)

Notably, a portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:

• Average 12-month forward returns of nearly 19%
• 12-month win rate (percentage of picks returning positive) of about 72%

The Right Way To Invest Is Through Portfolios

Individual stocks can soar or tank but one thing matters: staying invested. The right portfolio can help you stay invested, capture upside and mitigate the downside associated with any individual stock.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.