In the early ’90s, Danaher consisted of a group of discrete, cyclical businesses with no focus. In the mid-’90s, the company started to create what is now five operating segments that add up to $16 billion in revenues. Segments include Test & Measurement, Environmental, Dental, Life Sciences & Diagnostics and Industrial Technologies. Investors know the segments through names such as Fluke, Beckman-Coulter, Tektronics, Kerr and others.
Danaher recently announced that it anticipates EPS for Q2 2012 to be in a range of 76 to 81 cents, and full-year earnings expectations have been upped to $3.25 to $3.35 from a previous range of $3.20 to $3.35 — all roughly in line with analyst expectations. Danaher’s net income is just north of the $2 billion mark, and cash flow continues to improve every year.
The Rales brothers have a good thing going along the Potomac, with a share price of $53 right near its 52-week high. Be sure to check in with this company before heading into Georgetown for dinner.
The Washington Post
The District of Columbia also features yet another home-grown product, The Washington Post Co. (NYSE:WPO). The Post was founded in 1877 and very nearly did not make it. The paper was sold at auction to publisher Eugene Meyer for $825,000 in 1933, and in 1946 Donald Graham, the husband of Katherine Graham, became the owner. Katherine Graham followed Donald, and now their son, Donald Jr., runs the show.
The Post’s most famous investor is Warren Buffett, whose 37-year run on the board of directors just ended last year. Buffett clearly had a hand in the company’s growth from sleepy local paper, to multimedia, multi-outlet publishing giant. The Washington Post Co. owns, among other things, Post-Newsweek Stations, Cable ONE, The Slate Group; The Gazette and Southern Maryland Newspapers; Avenue100 Media Solutions, SocialCode, a full-service Facebook advertising agency; and Kaplan, Inc.
Like virtually everyone else in the publishing industry, The Washington Post Co. is going through tough times. Circulation and advertising dollars are drying up, and major websites’ papers still aren’t raking in enough dough. The Post’s profits were squeezed last year, down to $117 million, and cash flow, while still adequate, also suffered at $206 million — of which 16% was questionable (meaning changes in taxes payable, tax benefits from stock options, and asset sales, among other lesser-quality means).
However, investors are rewarded with a hefty dividend yield of 2.8% for their $600 entry price, so don’t short-change this Washington (and really, national) publisher quite yet — particularly in a presidential election year, when anyone and everyone associated with the political game will read The Post.
No travel would be complete without a ride into the nearby Virginia suburbs, and right outside the beltway in bustling, busy and construction-clogged McLean is Capital One (NYSE:COF) — another locally grown business, this time in the financial services sector.
Founded in 1988 by local Richard Fairbanks, Capital One is one of the 10 largest banks by deposits in the country. Of course, most people know the company through their “What’s in your wallet?” ad line, but the company also operates branches primarily in the Washington, Maryland and Virginia marketplace, with other outlets in New York, New Jersey and Texas.
Capital One is looking to expand its business, and recently has finished an acquisition of the ING Direct business in the U.S. from ING Groep (NYSE:ING) for $6.3 billion in cash and approximately 54 million Capital One shares, representing a 9.7% ownership stake.
With a paltry P/E of less than 7 even after a nice 15% run in the past half-year, Capital One currently looks like a bargain.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.