Fortive Corporation (FTV) — Priced at a Fair Value With Acceptable Growth Fundamentals

During the last year, Fortive returned a positive performance of 10.9%, with a high of $69.78 and a low of $52.47. Over the same period, the stock outpaced the S&P 500 index by 17.0%. The company's 50-day average price was $66.84 per share as of April 2023. Fortive Corporation designs, develops, manufactures, markets, and services professional and engineered products, software, and services worldwide. Based in Everett, WA, the large-cap Industrials company has 18,000 full time employees. Fortive has provided a 0.4% dividend yield over the last 12 months.

Declining Revenues With a Flat Capital Expenditure Trend:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue $7,320,000 $4,634,400 $5,254,700 $5,825,700
Gross Margins 50.3% 56.3% 57.2% 57.7%
Operating Margins 13.7% 11.6% 15.5% 17.3%
Net Income $738,900 $1,613,300 $608,400 $755,200
Net Margins 10.09% 34.81% 11.58% 12.96%
Earnings Per Share $1.97 $4.5 $1.63 $2.1
Diluted Shares 340,000 359,000 352,300 353,199
Free Cash Flow $1,158,900 $1,361,000 $911,100 $1,207,400
Capital Expenditures -$112,500 -$75,700 -$50,000 -$95,800
Net Current Assets -$6,350,000 -$2,631,900 -$4,433,600 -$3,725,000
Current Ratio 1.06 1.55 0.68 0.91
Long Term Debt $4,828,400 $2,830,300 $1,807,300 $2,251,600
Net Debt / EBITDA 3.69 2.61 2.63 1.75

A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:

Fortive has a trailing twelve month P/E ratio of 31.8, compared to an average of 20.49 for the Industrials sector. Based on its EPS guidance of $3.66, the company has a forward P/E ratio of 18.3. The compound average growth rate of the company's historical and projected earnings per share is 16.7%. On this basis, the company's PEG ratio is 1.9, which suggests that it is overpriced. On the other hand, the market is potentially undervaluing Fortive in terms of its book value because its P/B ratio is 2.4. In comparison, the sector average P/B ratio is 3.78. The company's shares are currently 63.8% above their Graham number. In summary, Fortive's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.

Analysts Give Fortive an Average Rating of Buy:

There are 16 analysts covering Fortive, with target prices ranging from $63.0 to $87.0 per share, for an average of $74.38. As of April 2023, the company is trading -10.1% away from its average target price, implying there is an analyst consensus of some upside potential. The average rating for Fortive is buy.

With a 1.6% short interest, Fortive has a very low short interest. Institutions own 96.2% of the company's shares, and it has a small amount of insider investors because 0.24% are owned by corporate insiders. Overall, the company's top shareholder is the Vanguard Group, Inc., whose 11% stake in the company is worth $2,560,393,816.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.