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Fortive (FTV) Down 0.2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Fortive (FTV - Free Report) . Shares have lost about 0.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Fortive due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fortive Q4 Earnings & Revenues Beat Estimates
Fortive Corporation 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.
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. 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.
Revenues are projected in the range of $1.4-$1.435 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.
Revenues are now projected in the range of $5.950-$6.1 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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -7.05% due to these changes.
VGM Scores
Currently, Fortive has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fortive has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Fortive (FTV) Down 0.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Fortive (FTV - Free Report) . Shares have lost about 0.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Fortive due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fortive Q4 Earnings & Revenues Beat Estimates
Fortive Corporation 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.
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.
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.
Revenues are projected in the range of $1.4-$1.435 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.
Revenues are now projected in the range of $5.950-$6.1 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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -7.05% due to these changes.
VGM Scores
Currently, Fortive has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Fortive has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.