QS Research · Michael Burry's Scion Capital analyst template · 2006
DANAHER CORP /DE/ (DHR)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -3% · downside -33% · upside +13%
DHR is a cyclical, deal-built life-sciences franchise whose normalized earnings power is close to today's price: at its own 23.6x EV/EBITDA on $7.64B normalized EBITDA, EV is $180.3B, less $22.89B net debt gives $157.4B equity, or $223.7/share, 2.8% below $230.25. The same base at 17.2x (Fortive) is $154.2 (-33%) and at 26.9x (Agilent) is $259.5 (+12.7%), so risk/reward is skewed down but the base case is not low enough to satisfy the short rule. The call uses cycle averages, not TTM: normalized EBITDA $7.64B vs TTM $7.85B, normalized FCF $6.05B vs TTM $5.73B, and normalized net income $4.86B vs TTM $4.33B; TTM P/E of 37.4x and net debt of $22.89B leave little margin of safety. I would watch, not own, until price or operating evidence improves the asymmetry.
Key numbers
- Share price: $230.25
- Market cap: $161.99B
- Latest financial period: TTM to Sep 25, 2026
- Revenue (TTM): $25.61B
- EV / EBITDA (TTM): 23.6x
- P/E (TTM): 37.4x
- Price / book: 3.02x
The 15 boxes
- ✓ 1. Long-form business notes
Danaher is a cyclical, deal-built healthcare and life-sciences equipment company: revenue ran $22.28B (FY2020) to a peak of $26.64B (FY2022), fell to $23.89B (FY2023) and has only partly recovered to $24.57B (FY2025), while operating income kept sliding from $7.54B (FY2022) to $4.69B (FY2025) and net income to common from $7.10B to $3.61B. Cash generation has followed the same cycle down: operating cash flow $8.52B (FY2022) to $6.42B (FY2025) with capex of $1.16B in FY2025. The portfolio itself changed between the oldest and newest reports filed here: Fortive (2016), Envista (2019) and Veralto (2023) were separated out, acquisitions have slowed well below historical rates, and a Masimo deal was still pending at the FY2025 10-K. Pricing and demand are government- and capital-budget-dependent: about 59% of FY2025 sales were outside the U.S. and about 11% from China, where volume-based procurement has already hurt revenue.
- ✓ 2. Competitive advantage
The sources support a mixed, not clean, moat: Danaher claims leadership across more than 15 operating companies in biotech, life sciences and diagnostics, sells a high level of recurring products/services through direct channels, and treats DBS as a competitive advantage. But the 10-K says competition is broad and fragmented—regional, specialized and large well-resourced rivals—and the risk factors explicitly warn that even effective competition may require price cuts. FY2022-FY2025 data show revenue, gross profit and operating income below the FY2022 peak and net income to common down to $3.61B in FY2025, while operating cash flow was still $6.42B; the supplied sources contain no TTM or Q3 2026 figures, so TTM cannot be shown beside the cycle.
- ✓ 3. 10-Q takeaways
Q3 2026 (three months ended Sep. 25, 2026) revenue rose 8.5% to $6.554B, with core sales +3.0% and core sales excluding respiratory testing +5.5%; operating margin was 19.0%, down 10 bps, while continuing-ops EPS of $1.71 included a $263M discrete tax benefit. Q3 2026 operating cash flow was $1.9B and non-GAAP free cash flow was $1.6B. Management guided Q4 2026 core revenue excluding respiratory revenue to +4.0%-5.0% and raised FY2026 adjusted diluted EPS guidance to $8.57-$8.62.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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