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Fortive (FTV) Beats Earnings and Revenue Estimates in Q2
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FortiveCorporation's (FTV - Free Report) first-quarter 2017 earnings per share of 60 cents beat the Zacks Consensus Estimate by 3 cents. Earnings were up 13.2% year over year.
Following the better-than-expected first-quarter results, share price was up 0.11% to $62.32.
However, in the last one year, shares of Fortive underperformed the Zacks categorized Electronics Test Equipment industry. While the industry gained 49.4%, the stock returned only 28.7%.
Revenues
Revenues of $1.54 billion were up 4.1% year over year. The increase was driven by strength across all its end markets. Also, the top line was slightly above the Zacks Consensus Estimate of $1.52 billion.
Moreover, acquisitions contributed to the revenue growth in the first quarter, partially offset by unfavorable currency translation due to the strength of the U.S. dollar.
Margins
Gross margin for the quarter was 48.5%, up 140 bps year over year, driven by higher revenues and solid expense management through restructuring activities.
Operating expenses (research & development and selling, general & administrative expenses) in the quarter were $449.1 million, 3.9% higher than the year-ago quarter. As a percentage of sales, selling, general & administrative expenses remained flat while research & development expenses decreased from the year-ago quarter. Therefore, adjusted operating margin of 19.2% was up 140 bps year over year.
Net Income
Fortive’s pro forma net income came in at $209.4 million, or 60 cents, compared with $181.9 million or 53 cents in the previous quarter. Our pro forma estimates exclude acquisition-related costs, restructuring charges, amortization of intangibles and other one-time items, as well as tax adjustments.
Including these above-mentioned items, GAAP net income was $199.7 million (57 cents per share) compared with $182 million (53 cents) in the year-ago quarter.
Free Cash Flow
During the reported quarter, the company generated approximately $121 million of free cash flow.
Guidance
For second-quarter 2017, management expects adjusted diluted net earnings per share to be in the range of 65–69 cents. The Zacks Consensus Estimate for the first quarter is pegged at 68 cents.
For 2017, management expects adjusted diluted net earnings to be in the range of $2.68–$2.78. For the full year, the Zacks Consensus estimate is pegged at $2.68.
Our Take
Fortive Corporation is a diversified industrial growth company. It provides industrial technology and professional instrumentation solutions on a global basis.
The company delivered strong fiscal first-quarter 2017 results with both earnings and revenues exceeding the Zacks Consensus Estimate.
We remain encouraged by the high single-digit core growth in the company’s Transportation Technologies platform. Also, the ongoing margin expansion owing to the Fortive Business System is impressive.
Also, Fortive’s foray into the Cloud computing segment is very encouraging. The recent acquisition of eMaint Enterprises by Fortive’s subsidiary, Fluke, and the buyout of Global Traffic Technologies have allowed the company to enter into the rapidly growing cloud computing market. The deal provides cloud/SaaS solutions for asset and equipment management primarily for industrial applications. It is trying to expand its SaaS and cloud capabilities within its portfolio, most likely through M&A.
However, end market cyclicality, integration issues and uncertainties in the international markets pose concerns.
Fortive Corporation Price, Consensus and EPS Surprise
Lam Research delivered a positive earnings surprise of 6.14%, on average, in the trailing four quarters.
Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.
KLA-Tencor delivered a positive earnings surprise of 14%, on average, in the last four quarters.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them? Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
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Fortive (FTV) Beats Earnings and Revenue Estimates in Q2
Fortive Corporation's (FTV - Free Report) first-quarter 2017 earnings per share of 60 cents beat the Zacks Consensus Estimate by 3 cents. Earnings were up 13.2% year over year.
Following the better-than-expected first-quarter results, share price was up 0.11% to $62.32.
However, in the last one year, shares of Fortive underperformed the Zacks categorized Electronics Test Equipment industry. While the industry gained 49.4%, the stock returned only 28.7%.
Revenues
Revenues of $1.54 billion were up 4.1% year over year. The increase was driven by strength across all its end markets. Also, the top line was slightly above the Zacks Consensus Estimate of $1.52 billion.
Moreover, acquisitions contributed to the revenue growth in the first quarter, partially offset by unfavorable currency translation due to the strength of the U.S. dollar.
Margins
Gross margin for the quarter was 48.5%, up 140 bps year over year, driven by higher revenues and solid expense management through restructuring activities.
Operating expenses (research & development and selling, general & administrative expenses) in the quarter were $449.1 million, 3.9% higher than the year-ago quarter. As a percentage of sales, selling, general & administrative expenses remained flat while research & development expenses decreased from the year-ago quarter. Therefore, adjusted operating margin of 19.2% was up 140 bps year over year.
Net Income
Fortive’s pro forma net income came in at $209.4 million, or 60 cents, compared with $181.9 million or 53 cents in the previous quarter. Our pro forma estimates exclude acquisition-related costs, restructuring charges, amortization of intangibles and other one-time items, as well as tax adjustments.
Including these above-mentioned items, GAAP net income was $199.7 million (57 cents per share) compared with $182 million (53 cents) in the year-ago quarter.
Free Cash Flow
During the reported quarter, the company generated approximately $121 million of free cash flow.
Guidance
For second-quarter 2017, management expects adjusted diluted net earnings per share to be in the range of 65–69 cents. The Zacks Consensus Estimate for the first quarter is pegged at 68 cents.
For 2017, management expects adjusted diluted net earnings to be in the range of $2.68–$2.78. For the full year, the Zacks Consensus estimate is pegged at $2.68.
Our Take
Fortive Corporation is a diversified industrial growth company. It provides industrial technology and professional instrumentation solutions on a global basis.
The company delivered strong fiscal first-quarter 2017 results with both earnings and revenues exceeding the Zacks Consensus Estimate.
We remain encouraged by the high single-digit core growth in the company’s Transportation Technologies platform. Also, the ongoing margin expansion owing to the Fortive Business System is impressive.
Also, Fortive’s foray into the Cloud computing segment is very encouraging. The recent acquisition of eMaint Enterprises by Fortive’s subsidiary, Fluke, and the buyout of Global Traffic Technologies have allowed the company to enter into the rapidly growing cloud computing market. The deal provides cloud/SaaS solutions for asset and equipment management primarily for industrial applications. It is trying to expand its SaaS and cloud capabilities within its portfolio, most likely through M&A.
However, end market cyclicality, integration issues and uncertainties in the international markets pose concerns.
Fortive Corporation Price, Consensus and EPS Surprise
Fortive Corporation Price, Consensus and EPS Surprise | Fortive Corporation Quote
Stocks to Consider
Currently, Fortive has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry are Lam Research (LRCX - Free Report) , carrying a Zacks Rank #1 (Strong Buy), and Applied Materials (AMAT - Free Report) and KLA-Tencor (KLAC - Free Report) , with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lam Research delivered a positive earnings surprise of 6.14%, on average, in the trailing four quarters.
Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.
KLA-Tencor delivered a positive earnings surprise of 14%, on average, in the last four quarters.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them? Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>