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In December 2018, Fortive Corporation ( NYSE:FTV ) announced its most recent earnings update, which confirmed that the company experienced a major headwind with earnings declining by -15%. Below is a brief commentary on my key takeaways on how market analysts perceive Fortive’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts’ outlook for this coming year seems optimistic, with earnings growing by a robust 22%. This growth seems to continue into the following year with rates arriving at double digit 36% compared to today’s earnings, and finally hitting US$1.3b by 2022.
While it’s helpful to understand the growth rate each year relative to today’s figure, it may be more beneficial to analyze the rate at which the company is rising or falling every year, on average. The pro of this approach is that we can get a bigger picture of the direction of Fortive’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 11%. This means, we can presume Fortive will grow its earnings by 11% every year for the next couple of years.
For Fortive, I’ve put together three fundamental aspects you should further examine:
- Financial Health : Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation : What is FTV worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FTV is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of FTV? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. On rare occasion, data errors may occur. Thank you for reading.