Fortive (NYSE:FTV) - Share price, News & Analysis

Q: What is the Fair Price of FTV when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

FTV ($58.3) is trading below our estimate of [[fair value]] ($99.37)

FTV fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	2/6
Past Performance	2/6
Financial Health	4/6
Dividends	0/6

FTV Stock Overview

Fortive Corporation designs, develops, manufactures, markets, and services professional and engineered products, software, and services worldwide.

Rewards

Trading at 41.3% below our estimate of its fair value

Earnings are forecast to grow 15.58% per year

Analysts in good agreement that stock price will rise by 27.5%

Risk Analysis

Profit margins (11.9%) are lower than last year (30.8%)

Fortive Competitors

Otis Worldwide

NYSE:OTIS

US$26.8b

Xylem

NYSE:XYL

US$15.7b

Dover

NYSE:DOV

US$16.4b

IDEX

NYSE:IEX

US$15.1b

Price History & Performance

Summary of all time highs, changes and price drops for Fortive
Historical stock prices
Current Share Price	US$58.30
52 Week High	US$79.87
52 Week Low	US$52.47
Beta	1.19
1 Month Change	-6.82%
3 Month Change	6.25%
1 Year Change	-17.91%
3 Year Change	-12.33%
5 Year Change	-18.52%
Change since IPO	19.96%

Recent News & Updates

Sep 13

Fortive Corporation (NYSE:FTV) Shares Could Be 32% Below Their Intrinsic Value Estimate

Today we will run through one way of estimating the intrinsic value of Fortive Corporation ( NYSE:FTV ) by projecting...

Sep 10

Fortive: Strategic Changes And Robust Balance Sheet Hold The Key

Summary Remolding the business portfolio to look for recurring revenue and diversification is paying off for Fortive. Higher productivity, increased volume, and improved pricing kept its operating margin steady. Robust liquidity and low leverage ensure that financial risks remain limited. The stock is relatively overvalued. Fortive's Prospects And Challenges Fortive Corporation (FTV) provides intelligent engineered products, software, and services. It also sells health, safety, and quality enterprise software products for various industries, including manufacturing, healthcare, utilities, communications, and electronics. The most significant change in the company's business model has come from a shift to relying on recurring revenue and diversification. For the rest of 2022, its operating segments will likely improve revenue and profit margins. Globalizing its brands across various geographic regions will also help accelerate growth. However, the economic impact of the current recession, the supply chain issues, the China lockdown, and the adverse movement of foreign exchanges against the US dollar would take their toll on the cash flows. So, free cash flows declined in 1H 2022. The stock is relatively overvalued compared to its peers. Fortunately, it has low leverage and robust liquidity, which can expand its relative valuation multiples when the economy struggles. Nonetheless, I think the stock is still apt to hold for investors looking at the long-term return horizon. Strategies: A Critical Look Fortive Corporation's Filings Over the past few years, FTV has transformed its business portfolio, emphasized a diversified end market, and generated durable recurring revenue. The company has added software and consumables business while expanding its service business model. Earlier, retail fueling and vehicle repair markets contributed heavily to its total revenue mix. Now, healthcare has become the primary driver. The advantage of the new model is that the revenue is recurring. Plus, it caters to varied end markets. Tektronix is a case at this point. In Q2, the company saw mid-20% bookings growth at Tektronix (which provides test and measurement instruments in various industries), mid-teens growth in sensing technologies, and 20%-plus growth in Gems (Gems Sensor, a subsidiary). The company also leverages its brand value by commercializing and globalizing its brands across various geographic regions. So, the recurring revenue share doubled from 2016 to 2022. Q3 and FY2022 Forecast In Q3 and Q4, the management expects revenues to increase by "single digit to low double digits," while the adjusted operating profit margins can grow by 100 basis points year-over-year. Adjusted earnings per share can increase by 12%-16% from Q2 to Q3 and by a further 8%-11% in Q4. Each of its three operating segments will likely see topline rising. The company's revenues in FY2022 can increase by 8% to 9.5%. Better operational performance and lower taxes can produce $3.07-$3.13 in adjusted earnings per share in FY2022. So, improved performance can offset an expected $100 million charge due to adverse foreign exchange movement ($0.08 per share). Over the next three years, the company plans to achieve a "mid-single-digit" core revenue growth. It also looks to expand its operating margin by 300 basis points or a 50% growth in earnings. The profit growth can also reflect in 90% growth in free cash flow. The Outlook And Current Drivers Seeking Alpha By Q2-end, its hardware backlog was 21% higher than the beginning of the year. I expect its core business to grow for the remainder of 2022 due to a resilient product portfolio and continued customer demand. New logo generation, cross-sell bookings, and lower customer churn should keep its software sales high in 2022. In 2022, hardware orders and software revenues increased, albeit moderately, following the company's transition to a diversified product portfolio. Despite higher inflation and the loss from foreign exchange movements, its gross profit margin remained unchanged from Q1 to Q2, while the EBITDA margin expanded by 140 basis points. In Q2, on a geographic basis, the Western Europe regions proliferated (revenues up by "mid-teens"), while North America revenues were up by "high single digits." China saw ~20% order growth, despite the Shanghai lockdowns. Analyzing The Segment Performance In the Intelligent Operating Solutions segment, revenues increased by 16% in Q2 year-over-year. Sharp improvements in shipments and robust price realization led to a 205-basis point operating margin expansion in Q2 in this segment. In Precision Technologies, revenues increased by 6% in Q2 2022 compared to Q2 2021. The industrial, semi, medical, power, and energy markets witnessed steady growth. Higher usage of power and precision devices and expanded use of semiconductors led to the topline growth in this segment. Backlogs also went up during Q2. The superior operating performance of Tektronix and Sensing Technologies overcame the hurdles of Shanghai lockdowns. Favorable pricing and cost management also resulted in 90 basis point adjusted profit margin expansion. In Advanced Healthcare Solutions, revenue growth in Western Europe exceeded the revenue growth in North America in Q2. Higher ASP (Advanced Sterilization Products business) consumables increased sales in North America in Q2. However, disruptions from COVID presented challenges owing to staffing issues, and capital equipment constraints muddled the growth rate in Q2. Investors may note that FTV acquired ASP in April 2019 for $2.7 billion. Following the Provation acquisition, the company has invested in FBS (Fortive Business System) tools, which drove productivity savings and improved adjusted operating margin by 300 basis points in Q2 over a year ago. Steady Dividend Seeking Alpha FTV pays an annual dividend of $0.28 per share, translating into a 0.43% dividend yield. The dividend rate has changed little over the past five years. Dover Corporation's (DOV) forward dividend yield is 1.56%, while Snap-on Incorporated's (SNA) dividend yield is higher (2.54%). Strong Balance Sheet In 1H 2022, FTV's cash flow from operations (or CFO) increased by 20% compared to a year ago, led by higher year-over-year revenues. Capex, excluding the acquisition part, raised sharply in 1H 2022, leading to a modest 16% higher free cash flow (or FCF) in the past year.

Aug 19

Fortive declares $0.07 dividend

Fortive (NYSE:FTV) declares $0.07/share quarterly dividend, in line with previous. Forward yield 0.41% Payable Sept. 30; for shareholders of record Aug. 31; ex-div Aug. 30. See FTV Dividend Scorecard, Yield Chart, & Dividend Growth.

Shareholder Returns

	FTV	US Machinery	US Market
7D	-2.6%	-0.9%	-2.5%
1Y	-17.9%	-18.6%	-23.2%

Return vs Industry: FTV matched the US Machinery industry which returned -18.3% over the past year.

Return vs Market: FTV exceeded the US Market which returned -23.2% over the past year.

Price Volatility

Is FTV's price volatile compared to industry and market?
FTV volatility
FTV Average Weekly Movement	3.9%
Machinery Industry Average Movement	5.4%
Market Average Movement	6.8%
10% most volatile stocks in US Market	15.5%
10% least volatile stocks in US Market	2.8%

Stable Share Price: FTV is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: FTV's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2015	18,000	Jim Lico	https://www.fortive.com

Fortive Corporation designs, develops, manufactures, markets, and services professional and engineered products, software, and services worldwide. Its Intelligent Operating Solutions segment offers connected reliability tools; environment, health, safety, and quality enterprise software products; facility and asset lifecycle software; pre-construction planning and construction procurement solutions; ruggedized professional test tools; electric, pressure, and temperature calibration tools; and portable gas detection tools for a range of vertical end markets including manufacturing, process industries, healthcare, utilities and power, communications and electronics, and others. It markets its products and services under the ACCRUENT, FLUKE, GORDIAN, INDUSTRIAL SCIENTIFIC, INTELEX, PRUFTECHNIK, and SERVICECHANNEL brands.

Fortive Fundamentals Summary

How do Fortive's earnings and revenue compare to its market cap?
FTV fundamental statistics
Market Cap	US$20.73b
Earnings (TTM)	US$658.60m
Revenue (TTM)	US$5.52b

31.5x

P/E Ratio

3.8x

P/S Ratio

Is FTV overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
FTV income statement (TTM)
Revenue	US$5.52b
Cost of Revenue	US$2.35b
Gross Profit	US$3.17b
Other Expenses	US$2.51b
Earnings	US$658.60m

Last Reported Earnings

Jul 01, 2022

Next Earnings Date

Oct 26, 2022

Earnings per share (EPS)	1.85
Gross Margin	57.44%
Net Profit Margin	11.94%
Debt/Equity Ratio	39.0%

How did FTV perform over the long term?

See historical performance and comparison

Dividends

0.5%

Current Dividend Yield

15%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is FTV undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for FTV?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for FTV. This is calculated by dividing FTV's market cap by their current preferred multiple.
What is FTV's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$20.73b

FTV key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	4.3x
Enterprise Value/EBITDA	17.2x
PEG Ratio	2x

Price to Earnings Ratio vs Peers

How does FTV's PE Ratio compare to its peers?

FTV PE Ratio vs Peers

The above table shows the PE ratio for FTV vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	25.7x
OTIS Otis Worldwide	21.6x	8.7%	US$26.8b
XYL Xylem	37.4x	16.4%	US$15.7b
DOV Dover	14.3x	6.5%	US$16.4b
IEX IDEX	29.4x	13.1%	US$15.1b
FTV Fortive	31.5x	15.6%	US$20.7b

Price-To-Earnings vs Peers: FTV is expensive based on its Price-To-Earnings Ratio (31.5x) compared to the peer average (25.7x).

Price to Earnings Ratio vs Industry

How does FTV's PE Ratio compare vs other companies in the US Machinery Industry?

Price-To-Earnings vs Industry: FTV is expensive based on its Price-To-Earnings Ratio (31.5x) compared to the US Machinery industry average (18.5x)

Price to Earnings Ratio vs Fair Ratio

What is FTV's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

FTV PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	31.5x
Fair PE Ratio	25x

Price-To-Earnings vs Fair Ratio: FTV is expensive based on its Price-To-Earnings Ratio (31.5x) compared to the estimated Fair Price-To-Earnings Ratio (25x).

Share Price vs Fair Value

What is the Fair Price of FTV when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: FTV ($58.3) is trading below our estimate of fair value ($99.37)

Significantly Below Fair Value: FTV is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is Fortive forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

15.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: FTV's forecast earnings growth (15.6% per year) is above the savings rate (1.9%).

Earnings vs Market: FTV's earnings (15.6% per year) are forecast to grow faster than the US market (14.8% per year).

High Growth Earnings: FTV's earnings are forecast to grow, but not significantly.

Revenue vs Market: FTV's revenue (4.9% per year) is forecast to grow slower than the US market (7.7% per year).

High Growth Revenue: FTV's revenue (4.9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: FTV's Return on Equity is forecast to be low in 3 years time (12.7%).

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Past Performance

How has Fortive performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

2.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: FTV has high quality earnings.

Growing Profit Margin: FTV's current net profit margins (11.9%) are lower than last year (30.8%).

Past Earnings Growth Analysis

Earnings Trend: FTV's earnings have grown by 2.5% per year over the past 5 years.

Accelerating Growth: FTV's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: FTV had negative earnings growth (-57.8%) over the past year, making it difficult to compare to the Machinery industry average (9.8%).

Return on Equity

High ROE: FTV's Return on Equity (7%) is considered low.

Discover strong past performing companies

Financial Health

How is Fortive's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: FTV's short term assets ($2.4B) do not cover its short term liabilities ($2.6B).

Long Term Liabilities: FTV's short term assets ($2.4B) do not cover its long term liabilities ($4.0B).

Debt to Equity History and Analysis

Debt Level: FTV's net debt to equity ratio (31.7%) is considered satisfactory.

Reducing Debt: FTV's debt to equity ratio has reduced from 101.2% to 39% over the past 5 years.

Debt Coverage: FTV's debt is well covered by operating cash flow (28.4%).

Interest Coverage: FTV's interest payments on its debt are well covered by EBIT (10.4x coverage).

Balance Sheet

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Dividend

What is Fortive current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

0.48%

Current Dividend Yield

Dividend Yield vs Market

Fortive Dividend Yield vs Market

How does Fortive dividend yield compare to the market?
Segment	Dividend Yield
Company (Fortive)	0.5%
Market Bottom 25% (US)	1.7%
Market Top 25% (US)	4.7%
Industry Average (Machinery)	2.0%
Analyst forecast in 3 Years (Fortive)	0.5%

Notable Dividend: FTV's dividend (0.48%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: FTV's dividend (0.48%) is low compared to the top 25% of dividend payers in the US market (4.73%).

Stability and Growth of Payments

Stable Dividend: FTV is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: FTV is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.

Earnings Payout to Shareholders

Earnings Coverage: FTV is not paying a notable dividend for the US market.

Cash Payout to Shareholders

Cash Flow Coverage: FTV is not paying a notable dividend for the US market.

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Management

How experienced are the management team and are they aligned to shareholders interests?

6.3yrs

Average management tenure

CEO

Jim Lico (56 yo)

6.25yrs

Tenure

US$16,598,719

Compensation

Mr. James A. Lico, also known as Jim, has been Chief Executive Officer of Fortive Corporation since July 2016 and served as its President since July 2016. He serves as President at Fortive Corporation. Mr....

CEO Compensation Analysis

Jim Lico's Compensation vs Fortive Earnings

How has Jim Lico's remuneration changed compared to Fortive's earnings?
Date	Total Comp.	Salary	Company Earnings
Jul 01 2022	n/a	n/a	US$659m
Apr 01 2022	n/a	n/a	US$650m
Dec 31 2021	US$17m	US$1m	US$580m
Oct 01 2021	n/a	n/a	US$2b
Jul 02 2021	n/a	n/a	US$2b
Apr 02 2021	n/a	n/a	US$1b
Dec 31 2020	US$14m	US$897k	US$1b
Sep 25 2020	n/a	n/a	-US$147m
Jun 26 2020	n/a	n/a	-US$26m
Mar 27 2020	n/a	n/a	US$90m
Dec 31 2019	US$14m	US$1m	US$199m
Sep 27 2019	n/a	n/a	US$718m
Jun 28 2019	n/a	n/a	US$724m
Mar 29 2019	n/a	n/a	US$816m
Dec 31 2018	US$14m	US$1m	US$455m
Sep 28 2018	n/a	n/a	US$837m
Jun 29 2018	n/a	n/a	US$909m
Mar 30 2018	n/a	n/a	US$899m
Dec 31 2017	US$11m	US$1m	US$884m
Sep 29 2017	n/a	n/a	US$932m
Jun 30 2017	n/a	n/a	US$891m
Mar 31 2017	n/a	n/a	US$890m
Dec 31 2016	US$11m	US$920k	US$740m
Sep 30 2016	n/a	n/a	US$884m
Jul 01 2016	n/a	n/a	US$854m
Apr 01 2016	n/a	n/a	US$842m
Dec 31 2015	US$5m	US$701k	US$864m

Compensation vs Market: Jim's total compensation ($USD16.60M) is about average for companies of similar size in the US market ($USD13.04M).

Compensation vs Earnings: Jim's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

Leadership Team

Experienced Management: FTV's management team is seasoned and experienced (6.3 years average tenure).

Board Members

Experienced Board: FTV's board of directors are not considered experienced ( 2.9 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

NYSE:FTV Recent Insider Transactions by Companies or Individuals
Date	Value	Name	Entity	Role	Shares	Max Price
02 May 22	BuyUS$1,013,493	Alan Spoon	Individual		17,400	US$58.54
03 Nov 21	SellUS$506,209	Peter Underwood	Individual		6,575	US$76.99

Ownership Breakdown

What is the ownership structure of FTV?
Owner Type	Number of Shares	Ownership Percentage
State or Government	151,786	0.04%
General Public	5,879,128	1.7%
Individual Insiders	9,295,902	2.6%
Institutions	340,273,184	95.7%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Top Shareholders

Top 25 shareholders own 71.88% of the company

Ownership	Name	Shares	Current Value	Change %	Portfolio %
11.61%	T. Rowe Price Group, Inc.	41,293,683	$2.4b	1.39%	0.29%
11.04%	The Vanguard Group, Inc.	39,270,754	$2.3b	4.56%	0.05%
8.13%	BlackRock, Inc.	28,919,511	$1.7b	-2.64%	0.04%
5.44%	Wellington Management Group LLP	19,340,488	$1.1b	-10.28%	0.21%
4.55%	RBC Global Asset Management Inc.	16,168,163	$942.6m	0.31%	0.74%
3.79%	State Street Global Advisors, Inc.	13,470,236	$785.3m	-3.47%	0.05%
3.68%	Flossbach von Storch AG	13,095,007	$763.4m	4.82%	2.02%
3.32%	Viking Global Investors LP	11,798,954	$687.9m	-1.95%	3.26%
2.99%	FMR LLC	10,633,836	$620.0m	17.36%	0.06%
1.95%	Geode Capital Management, LLC	6,926,949	$403.8m	3.75%	0.05%
1.86%	Massachusetts Financial Services Company	6,620,457	$386.0m	-5.06%	0.1%
1.58%	Champlain Investment Partners, LLC	5,607,305	$326.9m	-1.53%	2.2%
1.27%	Steven Rales	4,514,618	$263.2m	0%	no data
1.16%	Brown Advisory Incorporated	4,112,635	$239.8m	11.03%	0.43%
1.14%	Northern Trust Global Investments	4,038,296	$235.4m	-2.18%	0.05%
1.12%	Mitchell Rales	4,000,000	$233.2m	0%	no data
1%	Select Equity Group, L.P.	3,564,387	$207.8m	-1.41%	0.77%
0.83%	Gates Capital Management, Inc.	2,967,801	$173.0m	0.05%	7.38%
0.83%	Adage Capital Management, L.P.	2,967,378	$173.0m	-21.16%	0.42%
0.82%	Norges Bank Investment Management	2,901,892	$169.2m	0%	0.02%
0.81%	UBS Asset Management	2,881,775	$168.0m	-7.4%	0.03%
0.76%	BNY Mellon Asset Management	2,712,125	$158.1m	6.42%	0.04%
0.76%	Ceredex Value Advisors LLC	2,700,364	$157.4m	94.33%	2.46%
0.74%	Artisan Partners Limited Partnership	2,638,680	$153.8m	-53.01%	0.16%
0.69%	CPP Investments	2,452,452	$143.0m	1.81%	0.15%

Ticker	Exchange	Primary Security	Security Type	Country	Currency	Listed on
FTV	NYSE (New York Stock Exchange)	Yes	Common Stock	US	USD	Jul 2016
F03	DB (Deutsche Boerse AG)	Yes	Common Stock	DE	EUR	Jul 2016
FTV *	BMV (Bolsa Mexicana de Valores)	Yes	Common Stock	MX	MXN	Jul 2016
0IRE	LSE (London Stock Exchange)	Yes	Common Stock	GB	USD	Jul 2016
F1TV34	BOVESPA (Bolsa de Valores de Sao Paulo)		BDR EACH 2 REPR 1 SHS UNSPON	BR	BRL	Jan 2020

Data	Last Updated (UTC time)
Company Analysis	2022/10/02 00:00
End of Day Share Price	2022/09/30 00:00
Earnings	2022/07/01
Annual Earnings	2021/12/31