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Danaher Vs. Agilent: Which Is The Better Option For Long-Term Investors

Mar. 15, 2023 7:02 AM ETAgilent Technologies, Inc. (A), DHRDHR.PB5 Comments
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  • Agilent and Danaher have significantly outperformed the market, and have solid competitive advantages.
  • The laboratory equipment and measurement devices industry is forecasted to grow at a ~7% CAGR to the year 2030.
  • While we believe that both companies are trading close to fair value, there is one we currently find more attractive.
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The laboratory equipment and measurement devices industry is particularly attractive, as it has good economics and is fairly resilient. Two companies we particularly like are Agilent Technologies (NYSE:A) and Danaher (NYSE:DHR), both of which have delivered outstanding

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Comments (5)

RatherBeWithMyDog profile picture
Thanks for the nice piece on my favorite space in healthcare. It’s hard to go wrong with DHR, TMO, or A long-term; that said I’d have to agree with A, especially at these prices today. Beyond the stronger balance sheet and higher historical ROIC, it’ll take a lot to move the needle for DHR and TMO though M&A just based on their sheer size. That, coupled with the fact they both grew through acquisitions in a ZIRP-fueled backdrop, I’d have to go with innovation over acquisition going forward. I already own a full position in TMO and will be opening a position in A before earnings on 11/20.
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@RatherBeWithMyDog Thank you for reading and the interesting comment, have a great day!
Could you tell me about the situation with Philips and Agilent? Will Philips make a strong come-back? Or will Agilent keep taking market shares?
I don't see much difference in balance sheets. Danaher has strong coverage and low leverage. DHR is the winner looking back, but Agilent might be the winner looking forward, going by estimates of eps and revenue growth. And there is something to be said for strategy. Agilent innovates while Danaher acquires. Tough pick, both good names.

Danaher 7yr metrics:
Beta 0.78
Stock market correlation 0.62%
Standard deviation annualized 21.15%
Sharpe 0.91
Up capture 99%, Down capture 59%
Lower debt/cap (than A), lower debt/equity, higher current ratio, 35x interest coverage

Agilent 7yr metrics:
Beta 1.05
stock market correlation 0.75%
Standard deviation annualized 23.57%
Sharpe 0.83
Up capture 137%, Down capture 108%
Projected higher eps growth, projected higher rev growth, higher volatility, higher overall risk
RatherBeWithMyDog profile picture
@user1416 I agree entirely with you here and I think your assessment is directionally spot-on: DHR (and TMO) winners looking back; A winner looking ahead. Well-said. I’d also add a stronger dividend growth profile for A and stronger starting yield (for Life Sciences anyways).

A will surely be a wilder ride, but I feel like the next decade will reward growth-by-innovation more than growth-by-acquisition. 🤷🏻‍♂️
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