Fresh off its spin-off of Vontier (VNT), Fortive (FTV) has seen no lull in investor enthusiasm for this newly-streamlined multi-industrial. It certainly doesn’t hurt that Fortive checks a lot of the most popular boxes for institutional investors in the industrial space - not only is it more leveraged to automation than commonly appreciated (with exposure in sensors, asset tracking/monitoring, and motional control), but the company’s aggressive moves toward software (particularly SaaS) and healthcare have certainly not gone unrewarded.
I like the secular growth story Fortive offers, as I believe the company is well-placed to leverage growing automation in manufacturing and logistics, growing remote monitoring across a range of industries, and growth digitalization in industries/markets like real estate and construction. I also see a clean balance sheet that will facilitate management resuming M&A relatively quickly.
What I don’t see, though, is a lot of undervaluation. The market is happy to pay for growth now, and the Street especially loves the above-average growth and above-average margin setup for Fortive, but the shares already trade at a pretty high relative premium to other high-quality names.
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Fortive Still Checks A Lot Of The Popular Multi-Industrial Boxes
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