DCF Studio

    DHR · NYQ · Healthcare

    Danaher Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 62.97

    Market price

    USD 211.81

    Implied upside

    -70.3%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Current EV/EBITDA of 23.0x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 62.97-70.3%
    Exit multiple
    USD 135.74-35.9%
    Market price
    USD 211.81

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn3bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 23.9bnUSD 23.3bnUSD 22.7bnUSD 22.1bnUSD 21.5bn-2.7%
    EBITUSD 5.4bnUSD 5.2bnUSD 5.1bnUSD 4.9bnUSD 4.8bn-2.7%
    NOPATUSD 4.5bnUSD 4.4bnUSD 4.3bnUSD 4.2bnUSD 4.1bn-2.7%
    Add depreciation & amortisationUSD 2.2bnUSD 2.1bnUSD 2.1bnUSD 2.0bnUSD 2.0bn-2.7%
    Less capital expenditureUSD -1.2bnUSD -1.2bnUSD -1.2bnUSD -1.1bnUSD -1.1bn-2.7%
    Less increase in working capitalUSD -111.8mUSD -108.9mUSD -106.0mUSD -103.1mUSD -100.4m-2.7%
    Free cashflow to firmUSD 5.4bnUSD 5.2bnUSD 5.1bnUSD 5.0bnUSD 4.8bn-2.7%
    Discount factor0.95720.87700.80360.73630.6746-
    Present valueUSD 5.2bnUSD 4.6bnUSD 4.1bnUSD 3.7bnUSD 3.3bn-10.8%
    Present Value Of The ForecastUSD 20.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.871Reported 0.808, pulled toward 1.0 (Blume)
    Cost of equity9.79%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 148.9bn88.3% of capital
    Total debtUSD 19.7bn11.7% of capital, book value as a proxy
    Tax rate15.5%Effective, capped at statutory
    WACC9.14%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 62.97

    65% of EV

    Forecast FCFF, final year
    USD 4.8bn
    Capex at depreciation, working capital in reinvestment
    USD 5.2bn
    Less reinvestment at g/ROIC (27.4% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 3.8bn
    ROIC (WACC floor)
    9.1%
    Terminal value, undiscounted
    USD 58.4bn
    Terminal value, discounted
    USD 39.4bn
    Enterprise value
    USD 60.2bn
    Less net debt
    USD 15.1bn
    Equity value
    USD 45.1bn

    Exit at 20.0x EBITDA

    Value per shareUSD 135.74

    81% of EV

    Terminal value, undiscounted
    USD 135.6bn
    Terminal value, discounted
    USD 91.5bn
    Enterprise value
    USD 112.3bn
    Less net debt
    USD 15.1bn
    Equity value
    USD 97.2bn

    Spread between methods: 73%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.14%85.0185.3885.7586.1386.50
    8.14%72.3372.6572.9673.2873.59
    9.14%62.4462.7162.9763.2463.51
    10.14%54.5054.7354.9655.1955.43
    11.14%47.9848.1948.3948.5948.80

    Outlined: this model. Green text: above today's price of 211.81. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-2.7%21.6%+24.3pp
    EBIT margin22.4%71.9%+49.6pp
    Discount rate9.1%4.3%-4.8pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.