Tuesday, May 5, 2020

Fortive's Transformation Story Supporting Valuation

I wasn't excited about Fortive's (FTV) valuation and prospective returns back in December, but the Street continues to give the company credit for the transformative M&A and business evolution it has underway, including a Roper-like (ROP) pivot toward higher-margin, less-cyclical, industrial software, and SaaS operations. In the meantime, while the Vontier (VNT) IPO has been postponed, Fortive has a relatively solid mix of businesses for the coming downturn/recovery cycle.

Valuation is still problematic for me, but the shares do at least, finally, offer a pretty decent long-term total prospective return. Given the Street's love of businesses that fit the profile of what Fortive is trying to become, the post-split valuation should improve, though I wouldn't sleep on the potential of Vontier once it's independent and able to reinvest in its own operations.

Read more here:
Fortive's Transformation Story Supporting Valuation

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