Vontier Corp (NYSE: VNT)

Sector: Technology Industry: Scientific & Technical Instruments CIK: 0001786842
Market Cap 5.96 Bn
P/B 4.79
P/E 14.66
P/S 1.94
ROIC (Qtr) 14.65
Div Yield % 0.25
Rev 1y % (Qtr) 4.08
Total Debt (Qtr) 2.14 Bn
Debt/Equity (Qtr) 1.72
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About

Vontier Corporation (VNT) is a global industrial technology company that operates in the mobility ecosystem, providing digitally enabled equipment and operating software solutions to enhance automation, productivity, and compliance. The company was established in 2019 and became an independent, publicly-traded entity on the New York Stock Exchange (NYSE) in 2020. Vontier's primary business activities encompass the provision of digital solutions to the convenience retail and energy retailing industries. The company operates through three reportable...

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Investment thesis

Bull case

  • Operating cash flow of 511M provides strong 16.98x coverage of stock compensation 30.10M, indicating sustainable incentive practices.
  • Robust free cash flow of 441.50M exceeds capital expenditure of 69.50M by 6.35x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 2.20B provides 10.82x coverage of working capital 203.30M, indicating strong operational backing.
  • Cash reserves of 492.20M provide ample 12.46x coverage of acquisition spending 39.50M, enabling strategic growth opportunities.
  • Strong free cash flow of 441.50M provides 11.18x coverage of acquisition spending 39.50M, indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of 511M barely covers its investment activities of (20.70M), with a coverage ratio of -24.69, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (20.70M) provide weak support for R&D spending of 175.70M, which is -0.12x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 511M provides thin coverage of dividend payments of (14.70M) with a -34.76 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 441.50M represents just -8.47x of debt issuance (52.10M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Long-term investments of 285M represent a high 1.74x of fixed assets 163.90M, indicating potential overexposure to financial assets versus operational capabilities.

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 42.52 Bn 73.55 16.10 0.16 Bn
2 KEYS Keysight Technologies, Inc. 40.41 Bn 47.54 7.52 2.78 Bn
3 COHR Coherent Corp. 36.77 Bn 191.27 5.84 3.55 Bn
4 TDY Teledyne Technologies Inc 30.39 Bn 37.17 5.06 2.53 Bn
5 FTV Fortive Corp 20.17 Bn 31.21 3.75 3.31 Bn
6 TRMB Trimble Inc. 15.86 Bn 44.34 4.40 1.39 Bn
7 MKSI Mks Inc 13.83 Bn 445.66 23.26 4.55 Bn
8 CGNX Cognex Corp 9.61 Bn 83.96 9.66 0.08 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.75 1.95
EV to Cash from Ops. EV/CFO 14.98 17.85
EV to Debt EV to Debt 3.58 28.18
EV to EBIT EV/EBIT 13.48 29.92
EV to EBITDA EV/EBITDA 11.15 22.68
EV to Free Cash Flow [EV/FCF] EV/FCF 17.34 6.43
EV to Market Cap EV to Market Cap 1.29 -7.50
EV to Revenue EV/Rev 2.49 6.43
Price to Book Value [P/B] P/B 4.79 6.23
Price to Earnings [P/E] P/E 14.66 51.49
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 27.63 -16.30
Dividend Payout Ratio % Div Payout % (Qtr) 3.80 2.76
Dividend per Basic Share Div per Share (Qtr) 0.11 0.31
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 3.49 6.72
Interest Coverage Int. cover (Qtr) 9.50 -13.41
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 9.86 -19.64
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 38.10 102.30
Dividend Growth (1y) % Div 1y % (Qtr) -12.50 1.76
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -6.53 25.14
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 3.42 18.59
EBIT Growth (1y) % EBIT 1y % (Qtr) -0.75 19.53
EBT Growth (1y) % EBT 1y % (Qtr) 2.13 58.54
EPS Growth (1y) % EPS 1y % (Qtr) 0.36 73.79
FCF Growth (1y) % FCF 1y % (Qtr) 26.00 -28.12
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 1.87 39.39
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.70 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.03 0.05
Cash Ratio Cash Ratio (Qtr) 0.38 3.01
Current Ratio Curr Ratio (Qtr) 1.16 4.74
Debt to Equity Ratio Debt/Equity (Qtr) 1.72 0.64
Interest Cover Ratio Int Coverage (Qtr) 9.50 -13.41
Times Interest Earned Times Interest Earned (Qtr) 9.50 -13.41
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 22.50 -298.29
EBIT Margin % EBIT Margin % (Qtr) 18.47 -318.49
EBT Margin % EBT Margin % (Qtr) 16.52 -353.76
Gross Margin % Gross Margin % (Qtr) 47.20 39.97
Net Profit Margin % Net Margin % (Qtr) 13.20 -356.47