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Fortive (FTV) Q1 Earnings & Revenues Beat Estimates, Up Y/Y

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Fortive Corporation (FTV - Free Report) reported first-quarter 2022 adjusted earnings of 70 cents per share, outpacing the Zacks Consensus Estimate by 2.9%. The figure also increased 11% year over year.

Revenues increased 9% year over year to $1.377 billion and beat the Zacks Consensus Estimate by 2%. Also, core revenues moved up 5.3% from the year-ago quarter’s levels.

The top line was driven by strong customer demand trends and synergies from the acquisitions amid persistent supply chain troubles and reimposition of lockdown in certain parts of the world. Robust demand for software-enabled workflow offerings resulted in mid-teens growth for software business.

Following the announcement, shares were down 1.4% in the aftermarket trading on Apr 28. In the past year, shares of Fortive have lost 17.2% of their value against the industry’s decline of 12.4%.

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 $588 million (contributing 42.7% to total first-quarter revenues), up 15% on a year-over-year basis.

Precision Technologies: This segment generated revenues of $462 million (33.6% of total revenues), up 3.4% from the prior-year quarter’s levels.

Advanced Healthcare Solutions: This segment generated revenues of $327 million (23.7% of total revenues), increasing 8.5% from the prior-year quarter’s levels.

Operating Details

For the quarter under review, the adjusted gross margin came in at 57.6%, which expanded 60 basis points (bps) year over year.

Total operating expenses were $579.7 million, up 12.7% year over year. As a percentage of revenues, selling, general & administrative expenses were 34.9%, expanded 90 bps year over year. Research & development costs, as a percentage of revenues, expanded 40 bps year over year to 7.2%.

Adjusted operating margin was 23%, expanding 30 bps on a year-over-year basis.

Segment-wise, the adjusted operating margin from Intelligent Operating Solutions came in at 27.2%, which contracted 145 bps year over year.

Precision Technologies’ adjusted operating margins of 22.7% expanded 30 bps year over year. Advanced Healthcare Solutions’ adjusted operating margins of 23.3% rose 160 bps.

Balance Sheet & Cash Flow

As of Mar 31, 2022, cash and cash equivalents were $684.3 million compared with $819.3 million on Dec 31, 2021.

Accounts receivables were $929 million in the reported quarter compared with $930.2 million in the prior quarter.

The company generated an operating cash flow of $214.8 million compared with $287 million reported in the previous quarter.

Free cash flow came in at $196 million compared with $265 million in the prior quarter.

Guidance

For second-quarter 2022, management expects adjusted net earnings in the range of 70-73 cents per share. The corresponding Zacks Consensus Estimate for the quarter is pegged at 75 cents per share.

Revenues are projected in the range of $1.385-$1.425 billion. The corresponding Zacks Consensus Estimate for the quarter is pegged at $1.44 billion. For the quarter, the company expects the adjusted operating margin to be around 23%. Free cash flow is expected to be $260 million.

For 2022, Fortive expects adjusted net earnings in the range of 3.04-$3.13 per share. The Zacks Consensus Estimate for the same is pegged at $3.09 per share.

Revenues are projected in the range of $5.765-$5.875 billion compared with the earlier guidance of $5.725-$5.875 billion. The corresponding Zacks Consensus Estimate for the quarter is pegged at $5.78 billion.

For 2022, the company expects an adjusted operating margin to be around 24%. Free cash flow is expected to be between $1.16 and 1.2 billion.

Zacks Rank & Other Stocks to Consider

Currently, Fortive has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector are Flex (FLEX - Free Report) , Jabil (JBL - Free Report) and Broadcom (AVGO - Free Report) . Jabil sports a Zacks Rank #1 (Strong Buy), while Flex and Broadcom carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Flex’s fiscal 2022 earnings is pegged at $1.88 per share, unchanged in the past 60 days. The long-term earnings growth rate is pegged at 14.9%.

Flex earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 25.6%. Shares of FLEX have declined 2.8% in the past year.

The Zacks Consensus Estimate for Jabil fiscal 2022 earnings is pegged at $7.25 per share, up 10.2% in the past 60 days. The long-term earnings growth rate is 12%.

Jabil earnings beat the Zacks Consensus Estimate all last four quarters, with the average being 13.5%. Shares of JBL have gained 13.3% in the past year.

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $35.67 per share, up 7.5% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 14.5%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 1.9%. Shares of AVGO have increased 26.9% in the past year.


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