Financial Analysis: Danaher (DHR) & Esterline Technologies (ESL)

Danaher (NYSE: DHR) and Esterline Technologies (NYSE:ESL) are both multi-sector conglomerates companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, analyst recommendations, valuation, institutional ownership and profitability.

Profitability

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This table compares Danaher and Esterline Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Danaher 13.60% 11.36% 6.20%
Esterline Technologies 3.31% 6.89% 3.96%

Insider & Institutional Ownership

77.7% of Danaher shares are held by institutional investors. Comparatively, 95.0% of Esterline Technologies shares are held by institutional investors. 12.2% of Danaher shares are held by company insiders. Comparatively, 1.4% of Esterline Technologies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Danaher and Esterline Technologies, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Danaher 0 4 14 0 2.78
Esterline Technologies 4 5 0 0 1.56

Danaher presently has a consensus target price of $102.27, indicating a potential upside of 5.80%. Esterline Technologies has a consensus target price of $79.25, indicating a potential upside of 11.62%. Given Esterline Technologies’ higher probable upside, analysts plainly believe Esterline Technologies is more favorable than Danaher.

Dividends

Danaher pays an annual dividend of $0.64 per share and has a dividend yield of 0.7%. Esterline Technologies does not pay a dividend. Danaher pays out 15.9% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Danaher and Esterline Technologies’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Danaher $18.33 billion 3.68 $2.49 billion $4.03 23.99
Esterline Technologies $2.00 billion 1.05 $117.38 million $4.36 16.28

Danaher has higher revenue and earnings than Esterline Technologies. Esterline Technologies is trading at a lower price-to-earnings ratio than Danaher, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Danaher has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, Esterline Technologies has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500.

Summary

Danaher beats Esterline Technologies on 11 of the 16 factors compared between the two stocks.

About Danaher

Danaher Corporation designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide. The company's Life Sciences segment provides laser scanning, compound, surgical, and other stereo microscopes. This segment also offers filtration, separation, and purification technologies to the biopharmaceutical, food and beverage, medical, aerospace, microelectronics, and general industrial sectors. Its Diagnostics segment provides chemistry, immunoassay, microbiology, and automation systems, as well as hematology and flow cytometry products. The company offers analytical instruments, reagents, consumables, software, and services for hospitals, physicians' offices, reference laboratories, and other critical care settings. Its Dental segment provides consumables, equipment, and services to diagnose, treat, and prevent disease and ailments of the teeth, gums, and supporting bone. This segment offers implant systems, dental prosthetics, and associated treatment planning software; orthodontic bracket systems and lab products; endodontic systems and related consumables; restorative materials and instruments; infection prevention products; digital imaging systems and software; air and electric powered handpieces, and consumables; and treatment units. Its Environmental & Applied Solutions segment offers instrumentation, services, and disinfection systems to analyze, treat, and manage water in residential, commercial, industrial, and natural resource applications. This segment also provides equipment, software, services, and consumables for packaging, printing, marking, coding, and traceability applications for consumer, pharmaceutical, and industrial products. The company was formerly known as Diversified Mortgage Investors, Inc. and changed its name to Danaher Corporation in 1984. Danaher Corporation was founded in 1969 and is headquartered in Washington, the District of Columbia.

About Esterline Technologies

Esterline Technologies Corporation is a specialized manufacturing company. The Company designs, manufactures and markets engineered products and systems for application within the industries it serves. The Company operates through three segments: Avionics & Controls, Sensors & Systems, and Advanced Materials. The Company serves aerospace and defense customers. The Company’s Avionics & Controls business segment includes avionics systems, control and communication systems, and interface technologies capabilities. The Company’s Sensors & Systems business segment includes power systems, connection technologies and advanced sensors capabilities. The Company’s Advanced Materials business segment includes engineered materials and defense technologies capabilities. The Company designs and manufactures ruggedized military personal communication equipment, primarily headsets, handsets and field communications.

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