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Fortive (FTV) Earnings & Revenues Surpass Estimates in Q4

Zacks Equity Research

Fortive Corporation FTV reported fourth-quarter 2019 earnings of $1.03 per share, outpacing the Zacks Consensus Estimate of 97 cents. The figure increased 13.2% from the year-ago quarter and 18.4% on a sequential basis.

Revenues also increased 13.9% year over year to $2 billion. In addition, core revenues grew 0.4% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate by 1.2%.

Top Line in Detail

Fortive operates under the following two organized segments.

Professional Instrumentation: The segment generated revenues of $1.23 billion (61.5% of total fourth-quarter revenues), which increased 23.1% on a year-over-year basis. The increase was driven by contributions from acquisitions.

Industrial Technologies: This segment generated revenues of $771.4 million (38.5% of total revenues), which improved 1.9% from the prior-year quarter.

Fortive Corporation Price, Consensus and EPS Surprise

 

Fortive Corporation Price, Consensus and EPS Surprise

Fortive Corporation price-consensus-eps-surprise-chart | Fortive Corporation Quote

Operating Details

In the fourth quarter, gross margin came in at 51.7%, which expanded 60 basis points (bps) year over year.

Total operating expenses were $740.7 million, reflecting a 22.7% year-over-year increase. As a percentage of revenues, selling, general & administrative expenses increased from the year-ago quarter, while research & development costs decreased slightly.

Operating margin was 14.7%, which contracted 210 bps on a year-over-year basis.

Segment wise, operating margin from Professional Instrumentation came in at 13.9%, which contracted 220 bps year over year.

Industrial Technologies operating margins came in at 19.4%, which contracted 110 bps from the year-ago quarter.

Balance Sheet & Cash Flow

At the end of the fourth quarter, cash and cash equivalents were $1.2 billion and accounts receivables were $1.38 billion.

The company generated free cash flow of more than $450 million in the fourth quarter, up 17% from the year-ago period.

Guidance

For first-quarter 2020, management expects adjusted net earnings in the range of 70-74 cents per share. The corresponding Zacks Consensus Estimate for the quarter is pegged at 83 cents per share.

For 2020, Fortive expects adjusted net earnings in the range of $3.68-$3.78 per share. The Zacks Consensus Estimate for the same is pegged at $3.79 per share.

Zacks Rank & Stocks to Consider

Currently, Fortive carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Itron, Inc. ITRI, Splunk Inc. SPLK and Agilent Technologies A, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Itron, Splunk, and Agilent is currently projected at 25%, 31.2% and 12.5%, respectively.

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