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Danaher Corporation (DHR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Danaher Corporation (DHR)

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Intrinsic Value (DCF)

Current$239.89
→
Intrinsic$131.28
-45%
$81.44$131.28$230.48
Market implies 24% growth for 5 years
Current price reflects execution expectations above 10% growth — not unreasonable for quality businesses.
At $240, the market prices in continued strong cash flow growth (24%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $81 → Bull $230. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →6%8%10%12%
8%$166$183$201$220
10%$108$119$131$144
12%$77$86$95$104
14%$58$65$72$79

Bull Case

  • Bull case ($230) with 12% growth, 8% discount rate
  • Conservative 10% growth assumption is achievable based on track record

Bear Case

  • Bear case ($81) implies 66% downside at 8% growth, 12% discount
  • Price reflects 24% growth expectations vs 10% historical — high bar to clear
  • Trading 45% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$5.82B
Year 2$6.39B
Year 3$7.01B
Year 4$7.70B
Year 5$8.46B
Terminal$134.03B

📐 Model Inputs

Growth Rate9.8%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$5.30BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is DHR stock undervalued or overvalued?
🔴 OVERVALUED

DHR trades at $239.89 vs. our DCF-derived intrinsic value of $131.28, implying -45% downside. Using a 9.5% WACC and 9.8% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($195.19) suggests limited upside.

What is DHR's intrinsic value?

Using a 5-year DCF model: Base FCF of $5.30B, projected at 9.8% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $15.07B net debt and dividing by 0.74B shares: Bear $85.82 | Base $131.28 | Bull $195.19. Current price $239.89 implies -45% to base case.

How is DHR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 9.8% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($111.85B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 21.1x.