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Fortive (FTV) Q4 Earnings Beat Estimates, Revenues Miss

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Fortive Corporation (FTV - Free Report) reported fourth-quarter 2021 adjusted earnings of 79 cents per share, outpacing the Zacks Consensus Estimate by 1.3%. The figure also increased 13% year over year.

Revenues increased 3.8% year over year to $1.375 billion. However, the top line missed the Zacks Consensus Estimate by 4%.  Also, core revenues inched up 1% from the year-ago quarter’s levels.

The top line was driven by strong customer demand trends and an increase in orders for hardware offerings and secular tailwinds.

The company acquired Provation in the reported quarter, which is expected to boost the company’s healthcare segment strategy. Under the strategy, Fortive delivers software-enabled workflow solutions to hospitals and ambulatory surgical centers.

For the full year, the company reported revenues of $5.3 billion, up 13.1% year over year. Core revenues increased 9.5% from the previous year’s levels. For 2021, adjusted earnings came in at $2.75 per share, up 31.6% year over year.

Fortive Corporation Price, Consensus and EPS Surprise

 

Fortive Corporation Price, Consensus and EPS Surprise

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

 

Top Line in Detail

Fortive operates under the following three organized segments.

Intelligent Operating Solutions: The segment generated revenues of $579.8 million (contributing 42.1% to total fourth-quarter revenues), up 6.4% on a year-over-year basis.

Precision Technologies: This segment generated revenues of $473.9 million (34.5% of total revenues), up 2.1% from the prior-year quarter’s levels.

Advanced Healthcare Solutions: This segment generated revenues of $321.1 million (23.4% of total revenues), increasing 1.7% from the prior-year quarter’s levels.

Operating Details

For the fourth quarter, gross margin came in at 57.8%, which expanded 30 basis points (bps) year over year.

Total operating expenses were $592.4 million, up 2.5% year over year. As a percentage of revenues, selling, general & administrative expenses were 36.3%, contracting 100 bps year over year. Research & development costs, as a percentage of revenues, expanded 50 bps year over year to 6.8%.

Adjusted operating margin was 24.4%, expanding 120 bps on a year-over-year basis.

Segment-wise, the adjusted operating margin from Intelligent Operating Solutions came in at 27.9%, which contracted 80 bps year over year.

Precision Technologies adjusted operating margins of 23.9% expanded 170 bps year over year. Advanced Healthcare Solutions adjusted operating margins of 26.7% grew 260 bps.

Balance Sheet & Cash Flow

As of Dec 31, 2021, cash and cash equivalents were $819.3 million compared with $$838.4 million on Oct 1, 2021.

Accounts receivables were $930.2 million in the reported quarter compared with $830.4 million in the prior quarter.

The company’s operating cash flow of $287 million for the fourth quarter were down 12.9% from the previous quarter’s levels, but free cash flow of $265 million decreased 15.2%.

Guidance

For first-quarter 2022, management expects adjusted net earnings in the range of 65-69 cents per share. The corresponding Zacks Consensus Estimate for the quarter is pegged at 74 cents per share.

Revenues are projected in the range of $1.325-$1.365 billion. The corresponding Zacks Consensus Estimate for the quarter is pegged at $1.38 billion. For the quarter, the company expects the adjusted operating margin to be around 23%.

For 2022, Fortive expects adjusted net earnings in the range of 3.00-$3.13 per share. The Zacks Consensus Estimate for the same is pegged at $3.10 per share. Revenues are projected in the range of $5.725-$5.875 billion. The corresponding Zacks Consensus Estimate for the quarter is pegged at $5.73 billion. For 2022, the company expects an adjusted operating margin in the range of 24-24.5%.

Zacks Rank & Other Stocks to Consider

Currently, Fortive has a Zacks Rank #2 (Buy).

Other stocks worth consideration from the broader technology sector include Broadcom (AVGO - Free Report) , Apple (AAPL - Free Report) and Cadence Design Systems (CDNS - Free Report) . While Apple sports a Zacks Rank #1 (Strong Buy), Broadcom and Cadence carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $33.03 per share. The long-term earnings growth rate of the company is pegged at 14.5%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 1.41%. Shares of Broadcom have increased 28.3% in the past year.

The Zacks Consensus Estimate for Apple’s fiscal 2022 earnings is pegged at $6.15 per share. The long-term earnings growth rate of the company is pegged at 12.5%.

Apple’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 20.3%. Shares of AAPL have rallied 27% in the past year.

The Zacks Consensus Estimate for Cadence 2021 earnings is pegged at $3.25 per share. The long-term earnings growth rate of the company is pegged at 18.2%.

Cadence’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11%. Shares of CDNS have returned 7.8% in the past year.