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Fortive (FTV) Stock Gains 10.6% YTD: Will the Trend Continue?
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Fortive (FTV - Free Report) witnessed strong momentum year to date, with its shares up 10.6% in the same time frame compared with the sub-industry’s growth of 2.5%.
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 #3 (Hold) stock.
The company’s performance is being driven by momentum in the Intelligent Operating Solutions and Precision Technologies business segments. Solid customer demand momentum across most geographies and increased orders for software offerings bode well.
The company plans to 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 expects software and recurring revenues to grow 45-50% and 20%, respectively, from 2023 to 2028.
The company continues to engage in mergers and acquisitions to expand its market share. In October, the company announced that it had entered into an agreement to acquire EA Elektro-Automatik Holding GmbH. The acquisition is valued at $1.45 billion in cash, accounting for $215 million in tax benefits from Bregal Unternehmerkapital.
However, the company tempered guidance for 2023. Management now expects adjusted net earnings per share (EPS) between $3.37 and $3.40 (earlier view: $3.36-$3.42). Revenues are now anticipated to be between $6 billion and $6.1 billion (earlier view: $6.070-$6.1 billion).
Few Headwinds Persist
Apart from its solid fundamentals, the company is prone to a few risks. 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.
Also, softness in the healthcare business segment coupled with uncertain economic recovery in China continues to be a major concern.
A Look at Estimates
FTV’s EPS is expected to increase 7.9% and 6.7% on a year-over-year basis to $3.40 and $3.63 in 2023 and 2024, respectively.
The company’s revenues for 2023 are projected to rise 3.8% to $6.05 billion. For 2024, the revenues are anticipated to improve 4.2% to $6.31 billion.
The Zacks Consensus Estimate for Pegasystems’ 2023 EPS has improved 21.2% in the past 60 days to $1.77. PEGA delivered an average earnings surprise of 1,250.2% in the trailing four quarters. Shares of PEGA have soared 51% in the past year.
The Zacks Consensus Estimate for Flex’s fiscal 2024 EPS has increased 3.6% in the past 60 days to $2.56. Flex’s long-term earnings growth rate is 12.4%.
Flex’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 11%. Shares of the company have risen 19.8% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 2.8% in the past 60 days to $8.00. Watts Water’s long-term earnings growth rate is 7.8%.
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Fortive (FTV) Stock Gains 10.6% YTD: Will the Trend Continue?
Fortive (FTV - Free Report) witnessed strong momentum year to date, with its shares up 10.6% in the same time frame compared with the sub-industry’s growth of 2.5%.
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 #3 (Hold) stock.
The company’s performance is being driven by momentum in the Intelligent Operating Solutions and Precision Technologies business segments. Solid customer demand momentum across most geographies and increased orders for software offerings bode well.
The company plans to 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 expects software and recurring revenues to grow 45-50% and 20%, respectively, from 2023 to 2028.
The company continues to engage in mergers and acquisitions to expand its market share. In October, the company announced that it had entered into an agreement to acquire EA Elektro-Automatik Holding GmbH. The acquisition is valued at $1.45 billion in cash, accounting for $215 million in tax benefits from Bregal Unternehmerkapital.
However, the company tempered guidance for 2023. Management now expects adjusted net earnings per share (EPS) between $3.37 and $3.40 (earlier view: $3.36-$3.42). Revenues are now anticipated to be between $6 billion and $6.1 billion (earlier view: $6.070-$6.1 billion).
Few Headwinds Persist
Apart from its solid fundamentals, the company is prone to a few risks. 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.
Also, softness in the healthcare business segment coupled with uncertain economic recovery in China continues to be a major concern.
A Look at Estimates
FTV’s EPS is expected to increase 7.9% and 6.7% on a year-over-year basis to $3.40 and $3.63 in 2023 and 2024, respectively.
The company’s revenues for 2023 are projected to rise 3.8% to $6.05 billion. For 2024, the revenues are anticipated to improve 4.2% to $6.31 billion.
Stocks to Consider
Some better-ranked stocks in the broader technology space are Pegasystems (PEGA - Free Report) , Flex (FLEX - Free Report) and Watts Water Technologies (WTS - Free Report) . Pegasystems and Flex presently sport a Zacks Rank #1 (Strong Buy), whereas Watts Water Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Pegasystems’ 2023 EPS has improved 21.2% in the past 60 days to $1.77. PEGA delivered an average earnings surprise of 1,250.2% in the trailing four quarters. Shares of PEGA have soared 51% in the past year.
The Zacks Consensus Estimate for Flex’s fiscal 2024 EPS has increased 3.6% in the past 60 days to $2.56. Flex’s long-term earnings growth rate is 12.4%.
Flex’s earnings outpaced the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 11%. Shares of the company have risen 19.8% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 2.8% in the past 60 days to $8.00. Watts Water’s long-term earnings growth rate is 7.8%.