Top-level corporate insiders are some of the most informed participants in the market. If these individuals are buying company stock, it can be an indication that the stock is undervalued.
In this report, we are going to highlight some bullish insider buying at Danaher Corp (DHR:US). Danaher is a US science and technology company that operates across three segments: diagnostics, life sciences, and environmental and applied solutions. It is listed on the New York Stock Exchange and currently has a market capitalization of $157 billion.
Danaher Corp: insider buying
Form 4 filings show that on 19 November, Co-Founder and Chairman of the Executive Board Mitchell Rales purchased 26,784 DHR shares at a price of $226.14 per share. This purchase cost the insider approximately $6.1 million.
Rales’ last purchase was timed well
This insider activity is worth highlighting for two reasons. Firstly, it is a large, high-conviction purchase. The size of the purchase suggests that Rales is confident that Danaher stock is undervalued.
Secondly, Rales’ last purchase was timed well. Our data shows that the insider last purchased 141,420 shares on 29 May 2020 at a price of $164.69 per share. Since then, the stock has climbed as high as $248.
Danaher Corp posted a strong set of third-quarter results in October. For the quarter, revenues increased 34.5% year-over-year to $5.9 billion while net earnings increased 38% to $883.5 million. Non-GAAP adjusted diluted net earnings per common share were $1.72 which represents a 62% increase over the comparable 2019 period. Meanwhile, non-GAAP free cash flow was $1.5 billion, representing a 110% increase year-over-year. Looking ahead, Danaher said that it expects non-GAAP core revenue growth for the fourth quarter to be in the low-double digit range.
Despite these strong results, Danaher’s share price has pulled back recently. After rising to $248 in early November, it has fallen back to the $220 mark. Clearly, Mr. Rales sees value after the pullback. We view this large insider purchase as a bullish signal.