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Why Is Fortive (FTV) Up 2.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Fortive (FTV - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fortive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fortive Q1 Earnings & Revenues Beat Estimates
Fortive reported first-quarter 2023 adjusted earnings of 75 cents per share, outpacing the Zacks Consensus Estimate by 2.7% and increased 7% year over year.
Revenues increased 6% year over year to $1.461 billion and beat the Zacks Consensus Estimate by 3.1%. Core revenues also moved up 8.8% 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 $632 million (contributing 43.3% to total revenues), up 7.6% on a year-over-year basis.
Precision Technologies: This segment generated revenues of $516 million (35.3% of total revenues), up 11.5% from the prior-year quarter’s levels.
Advanced Healthcare Solutions: This segment generated revenues of $313 million (21.4% of total revenues), declining 4.1% from the prior-year quarter’s levels owing to unfavorable forex changes and product mix coupled with lower volume.
Operating Details
In the quarter under review, adjusted gross margin came in at 58.4%, which expanded 80 basis points (bps) year over year.
Total operating expenses (selling, general and administrative expenses, and research and development expenses) were $607.8 million, up 4.8% year over year.
Adjusted operating margin was 24%, expanding 100 bps on a year-over-year basis.
Segment-wise, the adjusted operating margins from Intelligent Operating Solutions and Precision Technologies were 30.2% and 24.6%, expanding 300 bps and 190 bps, respectively, year over year. However, Advanced Healthcare Solutions’ adjusted operating margin of 20.7% contracted 260 bps.
Balance Sheet & Cash Flow
As of Mar 31, cash and cash equivalents were $672.8 million compared with $709.2 million as of Dec 31, 2022.
As of Mar 31, accounts receivables were $940.7 million compared with $958.5 million as of Dec 31, 2022.
FTV generated an operating cash flow of $174.4 million compared with $214.8 million reported in the previous-year quarter.
Free cash flow was $149.6 million compared with $196 million in the prior-year quarter.
Guidance
For second-quarter 2023, management expects adjusted net earnings in the range of 78-82 cents per share. Revenues are projected in the range of $1.48-$1.515 billion.
Fortive expects adjusted operating margin to be between 24.5% and 25%. Free cash flow is expected to be $285 million.
For 2023, Fortive now projects adjusted net earnings in the range of $3.29-$3.40 per share (earlier view: $3.25-$3.40). Revenues are now anticipated in the range of $6-$6.1 billion (earlier view: $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?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Fortive has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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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Why Is Fortive (FTV) Up 2.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Fortive (FTV - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fortive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fortive Q1 Earnings & Revenues Beat Estimates
Fortive reported first-quarter 2023 adjusted earnings of 75 cents per share, outpacing the Zacks Consensus Estimate by 2.7% and increased 7% year over year.
Revenues increased 6% year over year to $1.461 billion and beat the Zacks Consensus Estimate by 3.1%. Core revenues also moved up 8.8% 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 $632 million (contributing 43.3% to total revenues), up 7.6% on a year-over-year basis.
Precision Technologies: This segment generated revenues of $516 million (35.3% of total revenues), up 11.5% from the prior-year quarter’s levels.
Advanced Healthcare Solutions: This segment generated revenues of $313 million (21.4% of total revenues), declining 4.1% from the prior-year quarter’s levels owing to unfavorable forex changes and product mix coupled with lower volume.
Operating Details
In the quarter under review, adjusted gross margin came in at 58.4%, which expanded 80 basis points (bps) year over year.
Total operating expenses (selling, general and administrative expenses, and research and development expenses) were $607.8 million, up 4.8% year over year.
Adjusted operating margin was 24%, expanding 100 bps on a year-over-year basis.
Segment-wise, the adjusted operating margins from Intelligent Operating Solutions and Precision Technologies were 30.2% and 24.6%, expanding 300 bps and 190 bps, respectively, year over year. However, Advanced Healthcare Solutions’ adjusted operating margin of 20.7% contracted 260 bps.
Balance Sheet & Cash Flow
As of Mar 31, cash and cash equivalents were $672.8 million compared with $709.2 million as of Dec 31, 2022.
As of Mar 31, accounts receivables were $940.7 million compared with $958.5 million as of Dec 31, 2022.
FTV generated an operating cash flow of $174.4 million compared with $214.8 million reported in the previous-year quarter.
Free cash flow was $149.6 million compared with $196 million in the prior-year quarter.
Guidance
For second-quarter 2023, management expects adjusted net earnings in the range of 78-82 cents per share. Revenues are projected in the range of $1.48-$1.515 billion.
Fortive expects adjusted operating margin to be between 24.5% and 25%. Free cash flow is expected to be $285 million.
For 2023, Fortive now projects adjusted net earnings in the range of $3.29-$3.40 per share (earlier view: $3.25-$3.40). Revenues are now anticipated in the range of $6-$6.1 billion (earlier view: $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?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Fortive has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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.