Fortive Following A Familiar Pattern

If you're well-acquainted with Danaher (DHR) and Roper (ROP), Fortive's (FTV) strategy is going to look pretty familiar in at least some respects. Like both Danaher and Roper, Fortive's management doesn't want to be the classic sort of industrial conglomerate and is instead pivoting towards more technology-driven markets, and particularly those with higher service/recurring revenue components. It's no surprise, of course, that Fortive would be similar to Danaher (from which it was spun out), and the company has yet to really follow Roper's SaaS focus, but in any case, Fortive management is not afraid to pay big multiples for businesses that it believes will generate attractive long-term margin profiles.

As far as the shares go, I'm not inclined to chase them here. The stock already seems to factor in healthy future cash flow growth, and I'm not willing to count on significant further expansion in short-term multiples for the industry.

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Fortive Following A Familiar Pattern