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Fortive (FTV) Q4 Earnings & Revenues Beat Estimates, Up Y/Y

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Fortive Corporation (FTV - Free Report) reported fourth-quarter 2022 adjusted earnings of 88 cents per share, outpacing the Zacks Consensus Estimate by 4.8% and increased 11% year over year.

Revenues increased 11% year over year to $1.53 billion and beat the Zacks Consensus Estimate by 2.3%. Core revenues also moved up 14% from the year-ago quarter’s levels.

The top line was driven by healthy customer demand especially for new products and services, strength in Fortive business system and strong execution amid a challenging macroeconomic environment.

In the past year, shares of Fortive have lost 0.3% against the sub-industry’s growth of 2.7%.

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Top Line in Detail

Fortive operates under the following three organized segments.

Intelligent Operating Solutions: The segment generated revenues of $635 million (contributing 41.5% to total fourth-quarter revenues), up 9.5% on a year-over-year basis.

Precision Technologies: This segment generated revenues of $553 million (36.1% of total revenues), up 16.7% from the prior-year quarter’s levels.

Fortive Corporation Price, Consensus and EPS Surprise

Fortive Corporation Price, Consensus and EPS Surprise

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

Advanced Healthcare Solutions: This segment generated revenues of $342 million (22.4% of total revenues), increasing 6.6% from the prior-year quarter’s levels.

Operating Details

In the quarter under review, the adjusted gross margin came in at 58.3%, which expanded 50 basis points (bps) year over year.

Total operating expenses (selling, general and administrative expenses, research and development expenses, and Russia exit and wind down costs) were $601.6 million, up 1.6% year over year.

Adjusted operating margin was 25.5%, expanding 110 bps on a year-over-year basis.

Segment-wise, the adjusted operating margin from Intelligent Operating Solutions came in at 31.2%, which expanded 330 bps year over year.

Precision Technologies’ adjusted operating margin of 26.3% expanded 240 bps year over year. Advanced Healthcare Solutions’ adjusted operating margins of 24.1% contracted 260 bps.

Balance Sheet & Cash Flow

As of Dec 31, 2022, cash and cash equivalents were $709.2 million compared with $705.3 million as of Sep 30, 2022.

As of Dec 31, 2022, Accounts receivables were $958.5 million compared with $901 million as of Sep 30. 2022.

The company generated an operating cash flow of $464.2 million compared with $287 million reported in the previous-year quarter.

Free cash flow came in at $428 million compared with $265 million in the prior-year quarter.

Guidance

For first-quarter 2023, management expects adjusted net earnings in the range of 71-74 cents per share. The corresponding Zacks Consensus Estimate is pegged at 78 cents per share.

Revenues are projected in the range of $1.4-$1.435 billion. The corresponding Zacks Consensus Estimate is pegged at $1.42 billion.

The company expects adjusted operating margin to be between 23.5% and 24%. Free cash flow is expected to be $170 million.

For 2023, Fortive expects adjusted net earnings in the range of $3.25-$3.40 per share. The Zacks Consensus Estimate is pegged at $3.35 per share.

Revenues are now projected in the range of $5.950-$6.1 billion. The corresponding Zacks Consensus Estimate is pegged at $5.96 billion.

For 2023, the company expects adjusted operating margin to be between 25% and 25.5%. Free cash flow is expected to be around $1.250 billion.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Cirrus Logic (CRUS - Free Report) . While Jabil sports a Zacks Rank #1 (Strong Buy), Arista and Pure Storage 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 Arista Networks’ 2022 earnings is pegged at $4.38 per share, up 1 cent in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.

Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have gained 3.9% in the past year.

The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.

Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 27% in the past year.

The Zacks Consensus Estimate for Cirrus Logic’s fiscal 2023 earnings is pegged at $5.91 per share. The long-term earnings growth rate is anticipated to be 3.4%.

CRUS’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 32.2%. Shares of CRUS have gained 9.2% in the past year.

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