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Fortive (FTV) Likely to Deliver a Surprise in Q2 Earnings

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We expect Fortive Corporation (FTV - Free Report) to beat expectations when it reports second-quarter 2017 results on Jul 27.

Fortive's results surpassed the Zacks Consensus Estimate in the preceding four quarters. It has an average four-quarter positive surprise of 5.90%.

The company's shares have returned only 17.56% year to date, underperforming the industry’s gain of 29.64%.

Why a Likely Positive Surprise?

Our proven model shows that Fortive is likely to beat on earnings because it has the right combination of the two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +2.90%. This is a meaningful indicator of a likely positive earnings surprise. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Fortivecarries a Zacks Rank #2 (Buy).

Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates. Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement. 

The combination of Fortive’s favorable Zacks Rank and positive Earnings ESP makes us reasonably confident of an earnings beat.

What is Driving the Better-Than-Expected Earnings?

Fortive Corporation is a diversified industrial growth company. It provides industrial technology and professional instrumentation solutions on a global basis.

We remain encouraged by the company’s diversified product portfolio which consists of professional and engineered products, software and services. Also, growth in the company’s Transportation Technologies platform is a positive.

Also, Fortive’s expansion into the Cloud computing segment is quite encouraging. The acquisition of eMaint Enterprises by Fortive’s subsidiary, Fluke, and the buyout of Global Traffic Technologies have allowed the company to enter into the rapidly growing cloud computing market. The deal is expected to expand its SaaS and cloud capabilities within its portfolio, most likely through M&A.

Moreover, Fortive’s restructuring actions have been helping the company in lowering the cost structure. The company has also been focusing on products which generally carry higher margins. These actions are expected to generate higher gross and operating margins for the company in the to-be reported quarter.

Fortive Corporation Price and Consensus


Fortive Corporation Price and Consensus | Fortive Corporation Quote

Stocks to Consider

Here are some stocks which you may consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Cypress Semiconductor Corporation (CY - Free Report) , with an Earnings ESP of +11.11% and Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lam Research Corporation (LRCX - Free Report) , with an Earnings ESP of +1.33% and a Zacks Rank #1.

The Priceline Group Inc. , with an Earnings ESP of +2.31% and a Zacks Rank #3.

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