There are conglomerates, and then there are conglomerates.
Plenty of companies in America do many, many different things, but Danaher (NYSE:DHR) takes the idea to an extreme. Nevertheless, this bewildering array of cyclical, non-cyclical, industrial, and non-industrial businesses still seems to be working out quite well.
There's just no way one column could do justice to all of what Danaher does. It has gear to measure blood gases, and it has performance dental imaging. It has products that make drinking water safe. It makes hand tools. It makes product identification equipment. It makes electronic test equipment. And that still doesn't really cover it.
Luckily, I don't think you need to track every moving part to get a sense of the bigger picture. Sales were up by more than 12% in the quarter, though once again, core (or organic) revenue growth was 4%, and the bulk of that growth came from acquisitions. Gross margin improved slightly, but that was taken away by some costs related to the acquisitions of Trojan, Leica, and others. Operating margin fell about 40 basis points from last year. On the bottom line, though, earnings still grew about 14%.
I encourage investors to peruse the company's 10-Q for this quarter (it's already filed) to get a more detailed look at how the businesses performed, but I'll give a high-altitude flyby. Professional instrumentation achieved increases in revenue of 19.5%, core revenue of 1%, and operating profit of 9.6%. Industrial technologies had revenue growth of 11.5%, core growth of 6%, and operating profit growth of 17.2%. Tools and components posted revenue growth of
-1%, core growth of 5%, and operating profit growth of 1.1%.
You can well imagine how many different competitors Danaher contends with on a day-to-day basis, given its wide array of businesses. Companies like Bayer (NYSE:BAY), Siemens (NYSE:SI), Agilent (NYSE:A), Honeywell (NYSE:HON), and Stanley (NYSE:SWK) are just some of the better-known names that it goes head-to-head with. Not only is competition a risk, but so is the ongoing risk of merger integration; if deals don't work, growth doesn't happen. That said, much like Illinois Tool Works (NYSE:ITW), Danaher has made acquisitions for quite some time now and knows what it's doing.
I like the mix of cyclical and non-cyclical businesses within Danaher. Even better, it has a pretty clean balance sheet and earns a double-digit return on assets. Valuation suggests that it's pretty much at fair value, but this would be an interesting stock if it fell off just a bit more.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
