Investors eager to learn how inflation , supply-chain problems, and, of course, the pandemic are affecting corporate profits just got a dose of good news from the industrial-healthcare giant Danaher.
The company won't release its full results until late January, but it said Tuesday that fourth-quarter sales growth is expected to be higher than management had told investors to expect. Sales should grow "at a high-teens to low-twenties percent range year-over-year," reads the company's news release. The consensus call on Wall Street is for fourth-quarter sales growth of 15.6%.
"Our team delivered an outstanding finish to 2021," said CEO Rainer Blair, adding that the sales outperformance covered all three of the company's reporting segments: life sciences, diagnostics, and environmental solutions.
That demand is solid is good news. Cowen analyst Dan Brennan wrote in a research report reacting to the news that it "bodes well for continued strength in 2022." Danaher stock was up about 0.8% in premarket trading, while futures on the S&P 500 and Dow Jones Industrial Average had gained about 0.3% and 0.1%, respectively.
The stock might not up be more because Danaher always beats Wall Street's sales estimates. The company hasn't reported sales lower than analysts projected for five-plus years.
With strong demand, investors will turn to thinking about profit margins amid rising prices. Inflation came in at 6.8% year over year in November, the most recent reading. That is the highest rate since the 1980s. Companies such as Danaher will have to pass rising costs on to customers to maintain profit margins.
In 2022, whether profit margins rise or fall will probably mean even more than whether sales are increasing or declining as investors sort through companies' results.
Wall Street will have to wait a little longer to get more detail from Danaher. The company will hold its fourth-quarter earnings conference call on Jan. 27 at 8 a.m. Eastern time. It will report its full fourth-quarter results before the conference call.
Wall Street expects the company to earn $2.48 in adjusted earnings per share. The company hasn't issued a forecast for fourth-quarter earnings, but its string of earnings "beats" relative to Wall Street projections also runs five-plus years.