Fortive Corp (NYSE: FTV)

Sector: Technology Industry: Scientific & Technical Instruments CIK: 0001659166
Market Cap 18.68 Bn
P/B 2.87
P/E 31.02
P/S 3.31
ROIC (Qtr) 5.56
Div Yield % 0.66
Rev 1y % (Qtr) 2.33
Total Debt (Qtr) 3.31 Bn
Debt/Equity (Qtr) 0.51

About

Fortive Corporation (FTV), a Delaware corporation, is a prominent player in the technology industry, specializing in providing essential tools for connected workflow solutions across various attractive end-markets. The company operates in three reportable segments: Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions. Fortive's global presence spans over 50 countries, employing more than 18,000 professionals, and is headquartered in Everett, Washington. Fortive's primary business activities revolve around advanced...

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Price action

Investment thesis

Bull case

  • Robust free cash flow of 1.15B exceeds capital expenditure of 71.10M by 16.15x, indicating strong organic growth funding capability.
  • Operating cash flow of 1.22B fully covers other non-current liabilities 788.60M by 1.55x, showing strong long-term stability.
  • Free cash flow of 1.15B provides exceptional 9.37x coverage of interest expense 122.60M, showing strong debt service ability.
  • Operating cash flow of 1.22B provides strong 3.93x coverage of inventory 310.60M, indicating efficient inventory management.
  • Retained earnings of 5.26B provide full 2.49x coverage of long-term debt 2.12B, indicating strong internal capital position.

Bear case

  • Operating cash flow of 1.22B barely covers its investment activities of (75.40M), with a coverage ratio of -16.17, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.22B provides thin coverage of dividend payments of (100.70M) with a -12.11 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (75.40M) provide weak support for R&D spending of 383.40M, which is -0.20x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • High receivables of 633.60M relative to inventory of 310.60M (2.04 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 863.70M show weak coverage of depreciation charges of 461.10M, with a 1.87 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Scientific & Technical Instruments
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GRMN Garmin Ltd 38.77 Bn 24.68 5.58 0.16 Bn
2 KEYS Keysight Technologies, Inc. 34.91 Bn 41.07 6.49 2.78 Bn
3 COHR Coherent Corp. 28.91 Bn 244.51 4.78 3.51 Bn
4 TDY Teledyne Technologies Inc 23.87 Bn 29.19 3.98 2.53 Bn
5 TRMB Trimble Inc. 19.54 Bn 54.65 5.43 1.39 Bn
6 FTV Fortive Corp 18.68 Bn 31.02 3.31 3.31 Bn
7 MKSI Mks Inc 10.78 Bn 38.63 2.81 4.55 Bn
8 CGNX Cognex Corp 6.14 Bn 55.76 6.32 0.08 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.82 2.20
EV to Cash from Ops. EV/CFO 17.76 9.84
EV to Debt EV to Debt 6.55 22.70
EV to EBIT EV/EBIT 25.08 15.74
EV to EBITDA EV/EBITDA 15.66 11.58
EV to Free Cash Flow [EV/FCF] EV/FCF 18.86 24.79
EV to Market Cap EV to Market Cap 1.16 -2.78
EV to Revenue EV/Rev 3.84 6.45
Price to Book Value [P/B] P/B 2.87 7.12
Price to Earnings [P/E] P/E 31.02 13.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 5.98 -16.40
Dividend Payout Ratio % Div Payout % (Qtr) 16.90 -7.19
Dividend per Basic Share Div per Share (Qtr) 0.30 0.31
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 8.64 6.83
Interest Coverage Int. cover (Qtr) 7.04 -13.61
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 26.40 -21.70
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -46.90 101.63
Dividend Growth (1y) % Div 1y % (Qtr) -6.25 1.97
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -31.64 19.84
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -5.38 17.31
EBIT Growth (1y) % EBIT 1y % (Qtr) -22.03 20.90
EBT Growth (1y) % EBT 1y % (Qtr) -22.75 82.68
EPS Growth (1y) % EPS 1y % (Qtr) -30.31 65.55
FCF Growth (1y) % FCF 1y % (Qtr) -16.47 32.88
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -0.54 34.27
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.47 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.08 0.05
Cash Ratio Cash Ratio (Qtr) 0.17 2.99
Current Ratio Curr Ratio (Qtr) 0.70 4.83
Debt to Equity Ratio Debt/Equity (Qtr) 0.51 0.67
Interest Cover Ratio Int Coverage (Qtr) 7.04 -13.61
Times Interest Earned Times Interest Earned (Qtr) 7.04 -13.61
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 23.50 -296.15
EBIT Margin % EBIT Margin % (Qtr) 15.31 -316.09
EBT Margin % EBT Margin % (Qtr) 13.14 -351.37
Gross Margin % Gross Margin % (Qtr) 60.30 40.05
Net Profit Margin % Net Margin % (Qtr) 10.70 -354.10