Fortive (FTV) Reports In-Line Q3 Earnings, Lags on Revenues

Fortive Corporation FTV reported third-quarter 2019 earnings of 87 cents per share, in line with the Zacks Consensus Estimate. The figure increased 17.6% from the year-ago quarter but decreased 3.3% on a sequential basis.

Revenues also increased 16.2% year over year to $1.86 billion. In addition, core revenues grew 2.1% from the year-ago quarter. However, the top line missed the Zacks Consensus Estimate by 1.22%.

The company stated that the integration of Advanced Sterilization Products is on track and will likely contribute to top-line growth in the near term.

Fortive Corporation Price, Consensus and EPS Surprise

 

Fortive Corporation Price, Consensus and EPS Surprise

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

Top Line in Detail

Fortive operates under the following two organized segments.

Professional Instrumentation: The segment generated revenues of $1.1 billion (60% of total third-quarter revenues), which increased 24.8% on a year-over-year basis. The increase was driven by contributions from acquisitions.

Industrial Technologies: This segment generated revenues of $743.8 million (40% of total revenues), which improved 5.2% from the prior-year quarter.

Operating Details

In the third quarter, gross margin came in at 49.9%, which contracted 170 basis points (bps) year over year.

Total operating expenses were $685.6 million, reflecting a 26% year-over-year increase. As a percentage of revenues, selling, general & administrative (SG&A) expenses increased from the year-ago quarter, while research & development costs decreased slightly.

Operating margin was 13%, which contracted 460 bps on a year-over-year basis.

Segment wise, operating margin from Professional Instrumentation came in at 10.6%, which contracted 730 bps year over year.

Industrial Technologies operating margins came in at 19.6%, which contracted 40 bps from the year-ago quarter.

Guidance

For fourth-quarter 2019, management expects adjusted net earnings in the range of 96 cents to $1.01 per share. The corresponding Zacks Consensus Estimate for the quarter is pegged at $1.02per share.

For 2019, Fortive expects adjusted net earnings in the range of $3.42-$3.47 per share. The Zacks Consensus Estimate for the same is pegged at $3.47 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, Booking Holdings Inc. BKNG and Ambarella, Inc. AMBA. While Itron sports a Zacks Rank #1 (Strong Buy), Booking Holdings and Ambarella carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Itron, Booking Holdings and Ambarella is currently projected at 25%, 13.08% and 11.18%, respectively.

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