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Fortive (FTV) Surges 23.1% YTD: Will the Uptrend Continue?
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Fortive (FTV - Free Report) witnessed strong momentum this year, with shares gaining 23.1% year to date compared with the sub-industry’s rise of 9%.
Fortive is a diversified industrial growth company that provides industrial technology and professional instrumentation solutions on a global basis. Going ahead, the company aims to tackle the overall cyclicality of its businesses by investing in multiyear megatrends, like automation, digitization and electrification.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #2 (Buy) stock.
The increase in share price is driven by the company’s robust financial performance. The company came up with an impressive performance in second-quarter 2023.
The company reported second-quarter 2023 adjusted earnings per share (EPS) of 85 cents, outpacing the Zacks Consensus Estimate by 4.9%. The bottom line increased 9% year over year. Revenues rose 4.3% year over year to $1.526 billion and beat the Zacks Consensus Estimate by 1.7%. Core revenues also moved up 5.5% from the year-ago quarter’s levels.
The company benefits from continued momentum in software and services businesses and solid recovery in the healthcare segment. The company plans to further grow its business using a five-way strategy. It plans to expand its market position in line with secular growth trends. FTV has transitioned its software offering in line with the growing demand for artificial intelligence and machine learning.
The company’s industrial and scientific business segment benefits from iNet expansion and cross-sell activity. Higher adoption of FAL digital solutions and robust backlog in power and digital T&M solutions bode well.
The company plans to utilize its innovation capabilities to improve core growth. It expects software and recurring revenues to grow 45-50% and 20%, respectively, from 2023 to 2028. It focuses on improving the Fortive Business System to drive innovation and sustainable results.
The company also raised guidance for 2023. Fortive now projects adjusted net EPS in the range of $3.36-$3.42 (earlier view: $3.29-$3.40). Revenues are now anticipated in the band of $6.070-$6.1 billion (earlier view: $6-$6.1 billion).
The Zacks Consensus Estimate for fiscal 2023 and 2024 revenues increased 1.5% and 1.4%, respectively, in the past 60 days. This reflects analysts’ optimism regarding the company’s prospects.
Despite strong demand, the company's near-term prospects might be affected by global macroeconomic weakness and inflation. High research and development costs, and leveraged balance sheets, are concerns.
The Zacks Consensus Estimate for Watts Water’s 2023 EPS has increased 5.8% in the past 60 days to $7.61. The company’s long-term earnings growth rate is 8%.
Watts Water’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 12.5%. Shares of WTS have rallied 28.3% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 10% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 12.6% in the past 60 days to $4.03.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 27.2% in the past year.
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Fortive (FTV) Surges 23.1% YTD: Will the Uptrend Continue?
Fortive (FTV - Free Report) witnessed strong momentum this year, with shares gaining 23.1% year to date compared with the sub-industry’s rise of 9%.
Fortive is a diversified industrial growth company that provides industrial technology and professional instrumentation solutions on a global basis. Going ahead, the company aims to tackle the overall cyclicality of its businesses by investing in multiyear megatrends, like automation, digitization and electrification.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #2 (Buy) stock.
The increase in share price is driven by the company’s robust financial performance. The company came up with an impressive performance in second-quarter 2023.
The company reported second-quarter 2023 adjusted earnings per share (EPS) of 85 cents, outpacing the Zacks Consensus Estimate by 4.9%. The bottom line increased 9% year over year. Revenues rose 4.3% year over year to $1.526 billion and beat the Zacks Consensus Estimate by 1.7%. Core revenues also moved up 5.5% from the year-ago quarter’s levels.
The company benefits from continued momentum in software and services businesses and solid recovery in the healthcare segment. The company plans to further grow its business using a five-way strategy. It plans to expand its market position in line with secular growth trends. FTV has transitioned its software offering in line with the growing demand for artificial intelligence and machine learning.
The company’s industrial and scientific business segment benefits from iNet expansion and cross-sell activity. Higher adoption of FAL digital solutions and robust backlog in power and digital T&M solutions bode well.
The company plans to utilize its innovation capabilities to improve core growth. It expects software and recurring revenues to grow 45-50% and 20%, respectively, from 2023 to 2028. It focuses on improving the Fortive Business System to drive innovation and sustainable results.
The company also raised guidance for 2023. Fortive now projects adjusted net EPS in the range of $3.36-$3.42 (earlier view: $3.29-$3.40). Revenues are now anticipated in the band of $6.070-$6.1 billion (earlier view: $6-$6.1 billion).
The Zacks Consensus Estimate for fiscal 2023 and 2024 revenues increased 1.5% and 1.4%, respectively, in the past 60 days. This reflects analysts’ optimism regarding the company’s prospects.
Despite strong demand, the company's near-term prospects might be affected by global macroeconomic weakness and inflation. High research and development costs, and leveraged balance sheets, are concerns.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Watts Water Technologies (WTS - Free Report) , Aspen Technology (AZPN - Free Report) and Woodward (WWD - Free Report) . Woodward presently sports a Zacks Rank #1 (Strong Buy), whereas Watts Water and Aspen Technology currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Watts Water’s 2023 EPS has increased 5.8% in the past 60 days to $7.61. The company’s long-term earnings growth rate is 8%.
Watts Water’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 12.5%. Shares of WTS have rallied 28.3% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58.
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have declined 10% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 12.6% in the past 60 days to $4.03.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 27.2% in the past year.