Fortive Q3 Earnings: Can NYSE:FTV Hit Its $0.86 EPS Target?

in EARNINGS/INVESTING IDEAS by

Fortive Corporation (NYSE:FTV) is scheduled to report Q3 earnings results on October 27, 2020.

The company is expected to report earnings of $0.86/share on revenue of $1.89 billion. The consensus earnings per share (EPS) of $0.86/share is based on a poll of 12 analysts and represents a decline in eps of −1.6% over the same quarter last year, when the company reported earnings of $0.87/share.

The revenue forecast of $1.89 billion based on a poll of 9 analysts implies a year-over-year (YoY) growth in revenue of 1.6%. Last year the company reported $1.86 billion in revenue for the quarter.

Expected to report EPS contraction of −1.6% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,889.96 $1,860.00 1.6%
EPS $0.86 $0.87 −1.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters and met expectations 3 quarters.

What are your expectations from Fortive Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.58 $0.68 17.1% Beat
Q1, 2020 $0.69 $0.74 6.9% Beat
Q4, 2019 $0.97 $1.03 6.2% Beat
Q3, 2019 $0.87 $0.87 0.0% Met
Q2, 2019 $0.89 $0.90 1.3% Beat
Q1, 2019 $0.69 $0.69 0% Met
Q4, 2018 $0.85 $0.91 6.8% Beat
Q3, 2018 $0.86 $0.86 0% Met

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 26, 2020, the stock price reacted by increasing 2.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 28, 2020 $71.90 $73.60 2.4% Increase
April 30, 2020 $65.55 $60.75 −7.3% Decline
February 6, 2020 $77.56 $79.02 1.9% Increase
October 24, 2019 $72.34 $68.36 −5.5% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.90, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.90 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Fortive Corporation is currently trading at $65.89/share, up 0.2% for the day. The company is trading at approximately 80.2% of its 52-week high of $82.12/share. The company’s stock price is down −10.5% since the last earnings report and down −1.7% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 33.61 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:FTV Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 45.35 and a forward P/E multiple of 21.24.

Fortive Corporation’s current share price also implies a price-to-book (P/B) multiple of 3.00. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 26, 2020
Stock Price (Current) $65.89
P/E Ratio 45.4x
P/E Ratio (Fwd) 21.2x
PEG Ratio −0.6
Total Debt / Total Capital 21.0%
Levered Free Cash Flow $1.403 billion
EV / EBITDA 17.4x

Finbox

Fortive Corporation is a large-cap stock with a market capitalization of $22.21 billion and a total enterprise value of $27.06 billion. The company operates in the Industrials sector and the Machinery industry.

Fortive Corporation designs, develops, manufactures, markets, and services professional and engineered products, software, and services worldwide. Its Professional Instrumentation segment provides test tools, and thermal imaging and calibration equipment for electrical, industrial, electronic, and calibration applications; online condition-based monitoring equipment; portable gas detection equipment, consumables, and software as a service offerings; subscription-based technical, analytical, and compliance services; and software, data analytics, and services for critical infrastructure in utility, industrial, energy, construction, facilities management, public safety, mining, and healthcare applications, as well as environmental, health, and safety applications. This segment also provides product realization services and products that help developers and engineers across the end-to-end product creation cycle from concepts to finished products; materials components; devices that sense, monitor, and control operational or manufacturing variables; and critical sterilization and disinfection solutions. It markets its products and services under the ACCRUENT, FLUKE, FLUKE BIOMEDICAL, FLUKE NETWORKS, GORDIAN, INDUSTRIAL SCIENTIFIC, INTELEX, LANDAUER, PRUFTECHNIK, QUALITROL, INVETECH, KEITHLEY, PACIFIC SCIENTIFIC, SONIX, and TEKTRONIX brands. The company’s Industrial Technologies segment offers solutions and services for use in fuel dispensing, remote fuel management, point-of-sale and payment systems, environmental compliance, vehicle tracking, and fleet and traffic management under the ANGI, GASBOY, GILBARCO, GILBARCO AUTOTANK, ORPAK, VEEDER-ROOT, and TELETRAC NAVMAN brands. This segment also offers professional tools, toolboxes, and automotive diagnostic equipment under the MATCO brand; and wheel service equipment under the COATS brand. Fortive Corporation was incorporated in 2015 and is headquartered in Everett, Washington.

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