Investment Thesis
Fortive demonstrates solid profitability margins (17.9% operating margin) and exceptional free cash flow generation ($208.2M, 19.5% FCF margin), but faces critical short-term liquidity stress (0.71x current ratio) and severely depressed returns on assets (1.2% ROA) and equity (2.2% ROE). The 26.7% YoY EPS decline against modest 1.9% revenue growth signals potential margin compression or dilution requiring clarification.
Strengths
- Robust gross margins of 63.2% with strong operating margin of 17.9% demonstrating competitive pricing power
- Exceptional free cash flow conversion of 19.5% FCF margin, indicating high-quality earnings generation
- Moderate leverage at 0.57x debt-to-equity with solid $3.5B debt structure manageable within operational cash flow
Risks
- Acute liquidity constraints with current ratio of 0.71x and quick ratio of 0.57x below critical 1.0x threshold
- Severely depressed return metrics (ROE 2.2%, ROA 1.2%) indicating significant asset utilization inefficiency despite reasonable margins
- Sharp EPS erosion of 26.7% YoY substantially outpacing 1.9% revenue growth, suggesting earnings quality deterioration
Key Metrics to Watch
- Current ratio trajectory and working capital management improvement
- Return on equity and asset efficiency metrics reversal
- Operating cash flow sustainability and relationship to declining net income
Financial Metrics
Revenue
1.1B
Net Income
136.4M
EPS (Diluted)
$0.44
Free Cash Flow
208.2M
Total Assets
11.6B
Cash
356.1M
Profitability Ratios
Gross Margin
63.2%
Operating Margin
17.9%
Net Margin
12.8%
ROE
2.2%
ROA
1.2%
FCF Margin
19.5%
Balance Sheet & Liquidity
Current Ratio
0.71x
Quick Ratio
0.57x
Debt/Equity
0.57x
Debt/Assets
0.0%
Interest Coverage
N/A
Long-term Debt
3.5B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T17:42:19.101135 |
Data as of: 2026-04-03 |
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