Danaher (DHR) 81.24 turned in an excellent third quarter. EPS rose 25.2%, sales increased 11.8% and pre tax profits improved 19.5% as profit margins rose from 15.0% to 16.0%. Analysts estimate EPS of $4.29 for fiscal 2008 ending in December.  If historical EPS growth  of 15% repeats the five year price could double to 161.  This is based on a relative value of 100 calculated on a market price of 81.24 and estimated EPS of $4.29 for fiscal 2008. 

Danaher sold an interest in First Technology PLC.  The gain is not included in reported EPS.  I and my investment club hold shares of DHR. 

H. Lawrence Culp, Jr., president and CEO, stated “…. we continue to see strength across more of our businesses……”

I am hoping that Ralph gives an update on DHR. I have some concerns about the most recent reported quarter, and need some guidance:

 1. Revenue increased 20% which initially looks good until you notice that the increased growth was due to a 13% increase from acquisitions, 5% increase due to currency exchange (so if the dollar did not depreciate last quarter, the revenue would have been 15%, and if the dollar appreciated, revenue would have been less than 15%) and growth from existing business was only 2%. That is with a price increase of 1% to 1.5%. That seems low to me.

2. The Co. spent $63 million in acquisitions last QTR-28.5% of that total was on goodwill.

3. Debt to Equity is now 33%; intrest payments for the quarter increased 52%

4. Net Earnings and net Cash Flow are much less than revenue growth.

5. There is 3% to 5% dilution per year.

6. Ratio analyzer has a lot of red and yellow!

Is this normal for the industry, or are these early warning signs. The stock price has gradually moved up since the Co. reported it's latest earnings-someone must like the results.