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Fortive Corporation (FTV - Free Report) reported fourth-quarter 2023 adjusted earnings of 98 cents per share, topping the Zacks Consensus Estimate by 5.4%. The bottom line increased 11% year over year.
Revenues rose 4% year over year to $1.58 billion and beat the Zacks Consensus Estimate by 1%. Core revenues also moved up 3% year over year, gaining from acceleration in the Intelligent Operating Solutions and Healthcare segments.
The year-over-year improvement in the top line was driven by continued momentum in Fortive Business System and transition toward recurring revenues amid a challenging macroeconomic environment.
The company also announced that it completed the acquisition of EA Elektro-Automatik Holding GmbH on Jan 3, 2024. It is a leading company of high-power electronic testing solutions for energy storage, mobility, hydrogen and renewable energy applications. This buyout is expected to boost the market share of FTV in electronic test and measurement solutions within the Precision Technologies business segment.
Fortive Corporation Price, Consensus and EPS Surprise
In 2023, FTV also inked an agreement to streamline its real estate footprint within its Precision Technologies Segment for proceeds of $90 million. Management anticipates the transaction to conclude in the first half of 2024, with any gain from the transaction recognized at the time of closing.
The company also provided guidance for 2024. Management projects adjusted net earnings to be between $3.73 per share and $3.85 per share. The Zacks Consensus Estimate is pegged at $3.65.
Revenues are anticipated to be between $6.425 billion and $6.525 billion, indicating 6-8% growth from the year-ago levels. The Zacks Consensus Estimate is pegged at $6.37 billion.
Core revenue growth is suggested to be between 2% and 4%. Free cash flow is forecast to be $1.375 billion.
Adjusted operating profit is envisioned in the range of $1.725-$1.775 billion, suggesting 10-13% growth from the prior-year levels.
For first-quarter 2024, adjusted net earnings are estimated in the range of 77-80 cents per share. Revenues are envisioned in the $1.515-$1.540 billion band. The Zacks Consensus Estimate for earnings per share and revenues for the first quarter is pegged at 82 cents and $1.52 billion, respectively.
Free cash flow is forecast to be $180 million. Adjusted operating profit is forecast in the range of $370- $385 million, indicating 6-10% growth from the year-earlier levels.
The stock was up 4.7% on Jan 31 and closed session at $78.18. In the past year, shares of FTV have gained 15.2% of their value against the sub-industry’s decline of 2.2%.
Image Source: Zacks Investment Research
Top Line in Detail
Fortive operates under the following three organized segments.
Intelligent Operating Solutions: The segment generated revenues of $683 million (contributing 43.1% to total revenues), up 6% on a year-over-year basis.
Precision Technologies: Segmental revenues totaled $549 million (34.7%), down 1% year over year.
Advanced Healthcare Solutions: This segment registered revenues of $352 million (22.2%), up 2% year over year.
Operating Details
In the quarter under review, adjusted gross margin reached 60.5%, which expanded 220 basis points (bps) year over year.
Total operating costs (selling, general and administrative expenses, and research and development expenditures) were $636.6 million, up 5.8% year over year.
Adjusted operating margin was 27.7%, extending 220 bps on a year-over-year basis.
Segment-wise, adjusted operating margins of Intelligent Operating Solutions and Precision Technologies were 34.2% and 29%, rising 300 bps and 270 bps, respectively, year over year.
As of Dec 31, cash and cash equivalents were $1.888 billion compared with $714.1 million as of Sep 29.
As of Dec 31, accounts receivables were $960.8 million compared with $925.4 million as of Sep 29.
FTV generated operating cash flow of $446.8 million for the fourth quarter compared with $464.2 million in the previous year. Non-GAAP free cash flow was $412.7 million compared with $428.1 million in the prior-year quarter.
FTV generated operating cash flow of $1,353.6 million for 2023 compared with $1,303.2 million in the previous year. Non-GAAP free cash flow was $1,245.8 million for 2023 compared with $1,207.4 million in the prior year.
The Zacks Consensus Estimate for Watts Water Technologies’ 2023 EPS has improved by 1.1% in the past 60 days to $8.09. WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have jumped 15.2% in the past year.
The Zacks Consensus Estimate for 2023 is pegged at a loss of 9 cents per share for NETGEAR, which remained unchanged in the past 30 days. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing once. The average surprise was 127.5%. Shares of NTGR were down 26.5% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS has improved by 1% in the past 60 days to $3.86. BLKB’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have gained 27.9% in the past year.
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Fortive (FTV) Q4 Earnings & Revenues Beat Estimates, Rise Y/Y
Fortive Corporation (FTV - Free Report) reported fourth-quarter 2023 adjusted earnings of 98 cents per share, topping the Zacks Consensus Estimate by 5.4%. The bottom line increased 11% year over year.
Revenues rose 4% year over year to $1.58 billion and beat the Zacks Consensus Estimate by 1%. Core revenues also moved up 3% year over year, gaining from acceleration in the Intelligent Operating Solutions and Healthcare segments.
The year-over-year improvement in the top line was driven by continued momentum in Fortive Business System and transition toward recurring revenues amid a challenging macroeconomic environment.
The company also announced that it completed the acquisition of EA Elektro-Automatik Holding GmbH on Jan 3, 2024. It is a leading company of high-power electronic testing solutions for energy storage, mobility, hydrogen and renewable energy applications. This buyout is expected to boost the market share of FTV in electronic test and measurement solutions within the Precision Technologies business segment.
Fortive Corporation Price, Consensus and EPS Surprise
Fortive Corporation price-consensus-eps-surprise-chart | Fortive Corporation Quote
In 2023, FTV also inked an agreement to streamline its real estate footprint within its Precision Technologies Segment for proceeds of $90 million. Management anticipates the transaction to conclude in the first half of 2024, with any gain from the transaction recognized at the time of closing.
The company also provided guidance for 2024. Management projects adjusted net earnings to be between $3.73 per share and $3.85 per share. The Zacks Consensus Estimate is pegged at $3.65.
Revenues are anticipated to be between $6.425 billion and $6.525 billion, indicating 6-8% growth from the year-ago levels. The Zacks Consensus Estimate is pegged at $6.37 billion.
Core revenue growth is suggested to be between 2% and 4%. Free cash flow is forecast to be $1.375 billion.
Adjusted operating profit is envisioned in the range of $1.725-$1.775 billion, suggesting 10-13% growth from the prior-year levels.
For first-quarter 2024, adjusted net earnings are estimated in the range of 77-80 cents per share. Revenues are envisioned in the $1.515-$1.540 billion band. The Zacks Consensus Estimate for earnings per share and revenues for the first quarter is pegged at 82 cents and $1.52 billion, respectively.
Free cash flow is forecast to be $180 million. Adjusted operating profit is forecast in the range of $370- $385 million, indicating 6-10% growth from the year-earlier levels.
The stock was up 4.7% on Jan 31 and closed session at $78.18. In the past year, shares of FTV have gained 15.2% of their value against the sub-industry’s decline of 2.2%.
Image Source: Zacks Investment Research
Top Line in Detail
Fortive operates under the following three organized segments.
Intelligent Operating Solutions: The segment generated revenues of $683 million (contributing 43.1% to total revenues), up 6% on a year-over-year basis.
Precision Technologies: Segmental revenues totaled $549 million (34.7%), down 1% year over year.
Advanced Healthcare Solutions: This segment registered revenues of $352 million (22.2%), up 2% year over year.
Operating Details
In the quarter under review, adjusted gross margin reached 60.5%, which expanded 220 basis points (bps) year over year.
Total operating costs (selling, general and administrative expenses, and research and development expenditures) were $636.6 million, up 5.8% year over year.
Adjusted operating margin was 27.7%, extending 220 bps on a year-over-year basis.
Segment-wise, adjusted operating margins of Intelligent Operating Solutions and Precision Technologies were 34.2% and 29%, rising 300 bps and 270 bps, respectively, year over year.
Advanced Healthcare Solutions’ adjusted operating margin of 25.7% improved 160 bps.
Balance Sheet & Cash Flow
As of Dec 31, cash and cash equivalents were $1.888 billion compared with $714.1 million as of Sep 29.
As of Dec 31, accounts receivables were $960.8 million compared with $925.4 million as of Sep 29.
FTV generated operating cash flow of $446.8 million for the fourth quarter compared with $464.2 million in the previous year. Non-GAAP free cash flow was $412.7 million compared with $428.1 million in the prior-year quarter.
FTV generated operating cash flow of $1,353.6 million for 2023 compared with $1,303.2 million in the previous year. Non-GAAP free cash flow was $1,245.8 million for 2023 compared with $1,207.4 million in the prior year.
Zacks Rank
Currently, Fortive has a Zacks Rank #2 (Buy).
Other Key Picks
Other stocks worth consideration in the broader technology space are Watts Water Technologies (WTS - Free Report) , NETGEAR (NTGR - Free Report) and Blackbaud (BLKB - Free Report) . While NETGEAR currently sports a Zacks Rank #1 (Strong Buy), Watts Water and Blackbaud carry a Zacks Rank of 2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Watts Water Technologies’ 2023 EPS has improved by 1.1% in the past 60 days to $8.09. WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have jumped 15.2% in the past year.
The Zacks Consensus Estimate for 2023 is pegged at a loss of 9 cents per share for NETGEAR, which remained unchanged in the past 30 days. NTGR’s earnings outpaced the Zacks Consensus Estimate in three of the last four quarters while missing once. The average surprise was 127.5%. Shares of NTGR were down 26.5% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2023 EPS has improved by 1% in the past 60 days to $3.86. BLKB’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 10.6%. Shares of BLKB have gained 27.9% in the past year.