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Fortive (FTV) Down 0.8% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Fortive (FTV - Free Report) . Shares have lost about 0.8% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Fortive Q1 Earnings Beat Estimates
Fortive reported first-quarter 2024 adjusted earnings per share (EPS) of 83 cents, which topped the Zacks Consensus Estimate by 5.1%. The bottom line increased 11% year over year.
Revenues rose 4% year over year to $1.52 billion. However, it missed the Zacks Consensus Estimate by 0.1%. 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 the Fortive Business System.
On Mar 14, 2024, the company completed a transaction to sell land and certain office buildings in its Precision Technologies segment for $90 million. The company received $20 million in cash proceeds and a $70 million promissory note secured by a letter of credit, with principal due in August and November 2024.
The company also provided guidance for 2024. Management now projects adjusted net EPS between $3.77 and $3.86 compared with the previous guidance of $3.73 and $3.85.
Revenues are now anticipated to be between $6.350 billion and $6.425 billion compared with the previous guidance of $6.425 billion and $6.525 billion, indicating 4.5-6% growth from the year-ago levels.
Core revenue growth is anticipated to be between 2% and 4%. Free cash flow is forecasted to be $1.385 billion.
Adjusted operating profit is envisioned in the range of $1.720-$1.770 billion, suggesting 9-13% growth from the prior-year levels.
For second-quarter 2024, adjusted net EPS is estimated to be in the range of 90-93 cents. Revenues are envisioned in the $1.550-$1.575 billion band. Free cash flow is forecasted to be $270 million. Adjusted operating profit is expected to be in the range of $410-$420 million, indicating 3-6% growth from the year-earlier levels.
Top Line in Detail
Fortive operates under the following three organized segments.
Intelligent Operating Solutions: The segment generated revenues of $666 million (contributing 43.7% to total revenues), up 5% on a year-over-year basis.
Precision Technologies: Segmental revenues totaled $559 million (36.7%), up 3% year over year.
Advanced Healthcare Solutions: This segment registered revenues of $300 million (19.6%), up 4% year over year.
Operating Details
In the quarter under review, adjusted gross margin reached 59.5%, which expanded 110 basis points (bps) year over year.
Adjusted operating margin was 25.1%, extending 110 bps on a year-over-year basis.
Segment-wise, adjusted operating margins of Intelligent Operating Solutions and Precision Technologies were 31.9% and 24.4%, rising 160 bps and 80 bps, respectively, year over year.
As of Mar 29, 2024, cash and cash equivalents were $704.6 million compared with $1,888.8 million as of Dec 31, 2023.
As of Mar 29, 2024, accounts receivables were $962.6 million compared with $960.8 million as of Dec 31, 2023.
FTV generated an operating cash flow of $256.7 million for the first quarter compared with $174.4 million in the year-ago quarter. Non-GAAP free cash flow was $230.3 million compared with $149.6 million in the prior-year quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Fortive has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 0.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Fortive (FTV - Free Report) . Shares have lost about 0.8% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Fortive Q1 Earnings Beat Estimates
Fortive reported first-quarter 2024 adjusted earnings per share (EPS) of 83 cents, which topped the Zacks Consensus Estimate by 5.1%. The bottom line increased 11% year over year.
Revenues rose 4% year over year to $1.52 billion. However, it missed the Zacks Consensus Estimate by 0.1%. 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 the Fortive Business System.
On Mar 14, 2024, the company completed a transaction to sell land and certain office buildings in its Precision Technologies segment for $90 million. The company received $20 million in cash proceeds and a $70 million promissory note secured by a letter of credit, with principal due in August and November 2024.
The company also provided guidance for 2024. Management now projects adjusted net EPS between $3.77 and $3.86 compared with the previous guidance of $3.73 and $3.85.
Revenues are now anticipated to be between $6.350 billion and $6.425 billion compared with the previous guidance of $6.425 billion and $6.525 billion, indicating 4.5-6% growth from the year-ago levels.
Core revenue growth is anticipated to be between 2% and 4%. Free cash flow is forecasted to be $1.385 billion.
Adjusted operating profit is envisioned in the range of $1.720-$1.770 billion, suggesting 9-13% growth from the prior-year levels.
For second-quarter 2024, adjusted net EPS is estimated to be in the range of 90-93 cents. Revenues are envisioned in the $1.550-$1.575 billion band.
Free cash flow is forecasted to be $270 million. Adjusted operating profit is expected to be in the range of $410-$420 million, indicating 3-6% growth from the year-earlier levels.
Top Line in Detail
Fortive operates under the following three organized segments.
Intelligent Operating Solutions: The segment generated revenues of $666 million (contributing 43.7% to total revenues), up 5% on a year-over-year basis.
Precision Technologies: Segmental revenues totaled $559 million (36.7%), up 3% year over year.
Advanced Healthcare Solutions: This segment registered revenues of $300 million (19.6%), up 4% year over year.
Operating Details
In the quarter under review, adjusted gross margin reached 59.5%, which expanded 110 basis points (bps) year over year.
Adjusted operating margin was 25.1%, extending 110 bps on a year-over-year basis.
Segment-wise, adjusted operating margins of Intelligent Operating Solutions and Precision Technologies were 31.9% and 24.4%, rising 160 bps and 80 bps, respectively, year over year.
Advanced Healthcare Solutions’ adjusted operating margin of 24.2% improved 200 bps.
Balance Sheet & Cash Flow
As of Mar 29, 2024, cash and cash equivalents were $704.6 million compared with $1,888.8 million as of Dec 31, 2023.
As of Mar 29, 2024, accounts receivables were $962.6 million compared with $960.8 million as of Dec 31, 2023.
FTV generated an operating cash flow of $256.7 million for the first quarter compared with $174.4 million in the year-ago quarter. Non-GAAP free cash flow was $230.3 million compared with $149.6 million in the prior-year quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Fortive has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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.