FTV Fortive
Leaner post-spin Fortive earns a moderate premium, but the model-to-price gap still warrants caution.
The story
Fortive has reshaped itself through portfolio separation (shedding lower-margin, capital-intensive units) into a leaner industrial-technology platform weighted toward software-enabled workflow and instrumentation tools. The multi-year revenue 'decline' reflects that divestiture, not organic erosion — TTM revenue and margins are already above the last reported fiscal year, and management just beat and raised guidance while buying back stock. It sits in a mature-but-still-growing phase: past the disruptive-growth stage, now optimizing margin and capital allocation rather than chasing top-line expansion.
Raised guidance and the earnings beat justify nudging Y1 growth and terminal margin up slightly and pulling margin convergence in a year given TTM margin (18.4%) is already tracking ahead of the prior FY glide path. Sales-to-capital moves up from 0.75 toward 0.9 because the post-separation entity is more asset-light and capital return (buybacks) is now favored over heavy reinvestment; beta eases toward the 1.05 industry anchor now that the conglomerate discount from the pre-spin mixed portfolio is gone.
Value drivers
| Revenue growth (Y1) | 6.5% |
| Terminal growth | 3.0% |
| Forecast horizon | 7y |
| Target operating margin | 23.0% |
| Years to target margin | 6 |
| Sales-to-capital | 0.90 |
| Beta | 1.05 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 9.0% |
| Terminal WACC | 8.8% |
Valuation bridge
| PV of explicit FCFF | 3.62B |
| PV of terminal value | 7.83B |
| Equity value | 8.43B |
| ÷ shares → per share | $27.66 |
News
bullish +0.85 · 8 articles
- How Investors May Respond To Fortive (FTV) Earnings Beat, Buybacks And Higher Full‑Year EPS Outlook
- Fortive (FTV) Posted Fresh Earnings, Is The Stock Cheap Or Pricey?
- Fortive Q2 Earnings Call Highlights
- Fortive Corporation Q2 2026 Earnings Call Summary
- FTV Q2 Earnings Beat on Core Growth, Guidance Raised
- Compared to Estimates, Fortive (FTV) Q2 Earnings: A Look at Key Metrics
- Fortive’s (NYSE:FTV) Q2 CY2026: Beats On Revenue
- Fortive (FTV) Q2 Earnings Report Preview: What To Look For
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 4.60B | 6.5% | 19.1% | 778.19M | 311.70M | 466.49M | 428.14M |
| 2 | 4.87B | 5.9% | 19.9% | 857.48M | 302.17M | 555.31M | 467.76M |
| 3 | 5.13B | 5.3% | 20.7% | 938.23M | 288.49M | 649.74M | 502.31M |
| 4 | 5.37B | 4.8% | 21.5% | 1.02B | 270.64M | 748.85M | 531.33M |
| 5 | 5.60B | 4.2% | 22.2% | 1.10B | 248.68M | 851.50M | 554.50M |
| 6 | 5.80B | 3.6% | 23.0% | 1.18B | 222.78M | 956.41M | 571.62M |
| 7 | 5.97B | 3.0% | 23.0% | 1.21B | 193.19M | 1.02B | 560.25M |
Key risks
- Portfolio transition (recent divestiture) makes historical revenue trend a poor guide and adds one-off cost noise to margins and invested capital
- Reported sales-to-capital of 0.45 TTM is far more capital-intensive than assumed; if that persists rather than normalizing, reinvestment needs will structurally cap value
- Industrial-technology end markets are cyclical — a slowdown would pressure both growth and margin assumptions simultaneously
Catalysts
- Continued margin expansion proof points post-separation validating the 23% target
- Buyback execution reducing share count and supporting EPS growth
- Further guidance raises if the Q2 beat momentum continues through H2