Danaher Corporation
Mr. Market is asking $177.17 for the business today.
The business is worth approximately $660.47.
That is a Δ of +272.8% from price to fair value. Mr. Market is offering DHR below our 25% margin of safety. Worth a closer look.
- G1 mean (19.9%) and median (8.7%) diverge — outlier estimates may be skewing the consensus.
Subscribe to read the full reckoning on DHR.
Mr. Market is asking $177.17. We say it's worth $660.47. The full eight-step audit follows for subscribers.
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The Reckoning
Eight steps. Every input is visible. Every formula is on the page. The same protocol is applied to every stock — consistency is most of the discipline.
Data validation
Garbage in, garbage out. Before any math runs, we confirm we have what the protocol requires.
| Operating Cash Flow > 0 | ✓ |
| Depreciation & Amortization exists | ✓ |
| Diluted shares outstanding > 0 | ✓ |
| At least 3 forward EPS estimates (we have 5) | ✓ |
Owner Earnings = OCF − D&A
From Buffett's 1986 Berkshire annual letter. Owner Earnings is the cash a business produces after spending what is necessary to maintain its current productive capacity. We use depreciation & amortization as the proxy for that maintenance reinvestment — “vaguely right rather than precisely wrong.”
| Operating Cash Flow (latest annual) | $6.42B |
| Depreciation & Amortization | $2.45B |
| Owner Earnings | $4.34B |
Growth — analyst consensus, capped, then faded to GDP
G1 is the simple average of five forward year-over-year EPS growth rates from analyst consensus, capped at 20% and floored at 0%. G2 is forecasted U.S. real GDP growth — no business compounds faster than the overall economy forever. Between them, growth fades linearly.
| From → To | EPS | → EPS | YoY growth |
|---|---|---|---|
| 2025 → 2026 | 5.04 | 8.44 | +67.4% |
| 2026 → 2027 | 8.44 | 9.13 | +8.2% |
| 2027 → 2028 | 9.13 | 9.96 | +9.1% |
| 2028 → 2029 | 9.96 | 10.83 | +8.7% |
| 2029 → 2030 | 10.83 | 11.50 | +6.2% |
| G1 mean (5-yr analyst consensus) | 19.9% |
| G1 median (sanity check) | 8.7% |
| G1 cap / floor | 0% / 20% |
| G1 (clipped) | 19.9% |
| G2 (forecasted U.S. real GDP) | 2.2% |
⚠ G1 mean and median diverge by > 10pp — outlier estimates may be skewing the consensus.
Projected Owner Earnings, years 1–11
Apply the linear-fade growth schedule to Owner Earnings. Year 11 exists only as the input to the terminal value formula in step V — it is not summed.
| Year | Growth applied | Projected OE | Discount factor | Present value |
|---|---|---|---|---|
| +1 | 19.93% | $5.20B | 0.957 | $4.98B |
| +2 | 18.17% | $6.15B | 0.916 | $5.63B |
| +3 | 16.40% | $7.15B | 0.877 | $6.28B |
| +4 | 14.63% | $8.20B | 0.840 | $6.89B |
| +5 | 12.86% | $9.25B | 0.804 | $7.44B |
| +6 | 11.09% | $10.28B | 0.770 | $7.91B |
| +7 | 9.32% | $11.24B | 0.737 | $8.28B |
| +8 | 7.55% | $12.09B | 0.705 | $8.52B |
| +9 | 5.78% | $12.78B | 0.675 | $8.63B |
| +10 | 4.01% | $13.30B | 0.646 | $8.60B |
| +11 (TV input) | 2.24% | $13.60B | 0.619 | — |
Discount rate — 10-year Treasury
The discount rate is the required rate of return — the minimum we demand to justify owning this business instead of a risk-free Treasury bond. Buffett anchors here for a reason: if a stock can't generate returns above the risk-free rate after accounting for its uncertainty, it is not an attractive investment.
| 10-year U.S. Treasury yield | 4.46% |
| Risk premium added | 0.00% |
| Discount rate (r) | 4.46% |
10Y Treasury 4.46%
Terminal value — perpetuity beyond year 10
No business stops generating cash after a decade. The terminal value captures the value of all cash flows from year 11 forward, modeled as a perpetuity growing at G2. This is typically the largest single component of intrinsic value.
| Year 11 Owner Earnings | $13.60B |
| g₂ used (with r − 0.5pp guard) | 2.2% |
| Future value of terminal = Y11 OE / (r − g₂) | $613.31B |
| Discount factor at year 10 | 1 / (1 + r)¹⁰ = 0.646 |
| Present value of terminal | $396.44B |
Intrinsic value per share
Sum the present value of all projected Owner Earnings (years 1–10) plus the present value of the terminal value. Divide by fully diluted shares outstanding.
| PV sum, years 1–10 | $73.15B |
| PV of terminal value | $396.44B |
| Total intrinsic value | $469.60B |
| Diluted shares outstanding | $711.0M |
| Intrinsic value per share | $660.47 |
Margin of safety
Intrinsic value is an estimate, not a fact. The margin of safety is the buffer that protects against being wrong. Default 25%; raise it for lower-quality businesses or higher-uncertainty situations.
| Intrinsic value per share | $660.47 |
| Margin of safety (rate) | 25% |
| Buy price (IV × (1 − MoS)) | $495.35 |
DHR — Danaher Corporation
| Symbol | DHR |
| Mr. Market’s asking price | $177.17 |
| Intrinsic value (with 25% MoS) | $495.35 |
| Δ% vs current price | +272.8% |
| Operating Cash Flow (TTM) | $6.42B |
| G1 / G2 | 19.9% / 2.2% |
| Mr. Market’s mood | DEPRESSED |
| Final verdict | OFFERED BELOW VALUE |
Mr. Market DiagnosticsBuffett-style screens (not in canonical protocol)Two supplementary checks we keep around but do not use to drive the BUY signal: an 8-dimension business-durability screen, and Buffett's 2010 Two-Column cross-check. Click to expand.
[ Expand ]
Two supplementary checks we keep around but do not use to drive the BUY signal: an 8-dimension business-durability screen, and Buffett's 2010 Two-Column cross-check. Click to expand.
Score: 75 / 100
| Check | Threshold | Observed | Verdict |
|---|---|---|---|
| ≥5 years of financial history (free-tier window) | >= 5 | 10 | ✓ |
| Positive net income every year of last 5 | 5 / 5 | 5 / 5 | ✓ |
| FCF (CFO − CapEx) positive in all of last 5 years | 5 / 5 | 5 / 5 | ✓ |
| Operating-margin coefficient of variation ≤ 0.15 | ≤ 0.15 | 0.14 | ✓ |
| EPS predictability R² ≥ 0.80 (5-yr trend fit) | >= 0.80 | 0.79 | ✗ |
Implied IV: $62.24
| Column A (cash + securities − debt) per share | -$17.23 |
| Sector multiple used | 11× pre-tax operating income |
| Column B (operating EPS × multiple) | $79.48 |
| Two-Column IV per share | $62.24 |
The Sources
Every number above traces back to the company's own SEC filings, fetched through Financial Modeling Prep's API. Treasury yields from FMP's daily series. Analyst consensus from FMP. The raw inputs follow.
Cash flow (most recent)
| Net income | $3.61B |
| Operating cash flow | $6.42B |
| Depreciation & amortization | $2.45B |
| Stock-based comp | $298.0M |
| Capital expenditure | -$1.16B |
| Free cash flow | $5.26B |
| Filing date | 2026-02-24 |
Forward analyst EPS estimates
| Year | EPS Avg | Low | High | Analysts |
|---|---|---|---|---|
| 2026 | 8.44 | 8.37 | 8.57 | 4 |
| 2027 | 9.13 | 8.92 | 9.46 | 6 |
| 2028 | 9.96 | 8.85 | 11.43 | 3 |
| 2029 | 10.83 | 10.69 | 11.16 | 1 |
| 2030 | 11.50 | 11.35 | 11.86 | 1 |