Maybe Fortive (FTV) is a little too good for its own good? I liked Fortive back in May and saw a pretty good prospective return for what has often been a relatively pricey company. Since then, the shares have done pretty well (up 20%), but have only just beat the S&P 500 and have actually trailed the broader industrial sector. Fortive has good short-cycle recovery exposure, which the Street likes right now, and has been buying its way into more software and recurring revenue, which the Street really likes (at least when Roper (ROP) does it), so I’m actually a little surprised it hasn’t been more of a standout.
Even so, that’s not to say that Fortive screens as “cheap” now. The returns now look more in line with the high-quality industrial sub-group where I believe Fortive belongs, though I do like Fortive’s M&A optionality, its focus on growth, and its potential leverage to some trends like reshoring and green buildings. I don’t like prospective returns in the mid-single-digits, but if I had to own a pricey stock in the space, Fortive wouldn’t be a bad choice in my opinion.
Read the full article here:
Fortive Offers Balanced Cyclical And Acyclical Growth, But Valuation Is More On Par With Peers Now
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