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Fortive's (FTV) Q4 Earnings and Revenues Trump Estimates

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Fortive Corporation (FTV - Free Report) reported fourth-quarter 2020 earnings of 70 cents per share, which outpaced the Zacks Consensus Estimate of 61 cents. The figure increased 18.6% from the year-ago quarter but decreased 25.5% on a sequential basis.

Revenues increased 4.9% year over year to $1.32 billion. Also, core revenues increased 0.7% from the year-ago quarter.  

The top line also outpaced the Zacks Consensus Estimate by 2.5%. The top-line growth was driven by strong SaaS revenue growth.

Top Line in Detail

Fortive operates under the following three organized segments.

Intelligent Operating Solutions: The segment generated revenues of $544.9 million (accounting for 41% of total fourth-quarter revenues), which increased 3.2% on a year-over-year basis.

Precision Technologies: This segment generated revenues of $464.2 million (35% of total revenues), which increased 2.3% from the prior-year quarter.

Advanced Healthcare Solutions: This segment generated revenues of $315.8 million (24% of total revenues), which increased 12% from the prior-year quarter.

Fortive Corporation Price, Consensus and EPS Surprise

Fortive Corporation Price, Consensus and EPS Surprise

Fortive Corporation price-consensus-eps-surprise-chart | Fortive Corporation Quote

Operating Details

For the fourth quarter, gross margin came in at 57.5%, which expanded 150 basis points (bps) year over year.

Total operating expenses were $578.2 million, reflecting a 1.9% year-over-year increase. As a percentage of revenues, selling, general & administrative expenses decreased from the year-ago quarter, while research & development costs increased.

Operating margin was 13.9%, which expanded 280 bps on a year-over-year basis.

Segment wise, operating margin from Intelligent Operating Solutions came in at 19.2%, which expanded 510 bps year over year.

Precision Technologies operating margins came in at 19.2% versus 17.5% in the year-ago quarter, while Advanced Healthcare Solutions margins of 5.7% expanded 140 bps.

Balance Sheet & Cash Flow

At fourth quarter-end, cash and cash equivalents were $1.8 billion and accounts receivables were $810.3 million.

The company generated operating cash flow of $329.4 million in the fourth quarter, up 33.3% from the year-ago period, while free cash flow of $312.6 million increased 38.8%.

Guidance

For first-quarter 2021, management expects adjusted net earnings in the range of 56-60 cents per share. The corresponding Zacks Consensus Estimate for the quarter is pegged at 55 cents per share.

For 2021, Fortive expects adjusted net earnings in the range of $2.40-$2.55 per share. The Zacks Consensus Estimate for the same is pegged at $2.35 per share.

Zacks Rank & Key Picks

Fortive currently has a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the broader technology sector include Semtech Corporation (SMTC - Free Report) , JD.com, Inc. (JD - Free Report) and Microchip Technology Incorporated (MCHP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Semtech, JD.com, and Microchip Technology is currently projected at 12.5%, 51.2% and 14.9%, respectively.

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