Danaher (DHR) Expected to Move Higher as M&A Ramps - Barron's

Danaher Corp. (NYSE: DHR) is up Monday following a positive mention in Barron's over the weekend.

Barron's noted that Danaher relies heavily on M&A for growth and usually favors the practice over stock buybacks to add value for shareholders. The company is known for its Danaher Business System, which is a system of continuous improvement.

Investors have been worried about the recent slowdown in deals for Danaher; the company spent $1 billion on 14 acquisitions in 2013, slowing to just five deals for $165 million in Q114. The company conducts about $2 billion worth of deals in a year on average.

The company trades with a 21 times P/E ratio for expected FY14 earnings and 19 times FY15 estimates. The company is also going for a 10 percent discount to peers on a price-to-free-cash-flow basis.

While mergers have been slowing, the company has plenty of cash to make the right deal. Danaher last reported having cash and equivalents of $8 billion. Should the company conduct more deals, shares could rise about 20 percent to $95, by some estimates. The company also converts over 100 percent of its earnings into free cash flow and that could be at $5.41 per share in 2015.

Shares of Danaher are up 0.9 percent.

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