Fortive (FTV) Gears Up for Q3 Earnings: What's in the Cards?

Fortive Corporation FTV is slated to report third-quarter 2020 results on Oct 27. In the last reported quarter, the company delivered an earnings surprise of 17.2%.

It topped the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average earnings surprise of 6.6%.

Performance in the Last Reported Quarter

Fortive reported second-quarter 2020 non-GAAP earnings of 68 cents per share, which outpaced the Zacks Consensus Estimate by 10 cents. The figure decreased 24.4% from the year-ago quarter but increased 8.1% on a sequential basis.

Revenues decreased 15.7% year over year and 8.3% sequentially to $1.57 billion. Also, core revenues declined 16.8% from the year-ago quarter.

Fortive Corporation Price and EPS Surprise

Fortive Corporation Price and EPS Surprise

Fortive Corporation price-eps-surprise | Fortive Corporation Quote

Acquisitions & Portfolio Strength — Key Catalysts

Fortive made strong endeavors toward innovation, and expansion of key offerings on the back of strong and accretive acquisitions. Acquisitions including Industrial Scientific and Landauer are expected to have driven its performance in the to-be-reported quarter.

The medical sterilization business has really taken off amid the coronavirus pandemic. Demand for the company’s Advanced Sterilization Products is expected to have benefited top-line growth.

In addition, its leaner cost structure, tariff mitigation efforts, continued strong pricing, and disciplined cost and supply chain management are expected to have helped margins to expand in the to-be-reported quarter.

Strength in the Professional Instrumentation segment — driven by acquisitions — is anticipated to be reflected in the upcoming quarterly results.

However, unfavorable foreign exchange rates could impact the results in this segment. Also, higher expenses incurred for these acquisitions and integration issues may negatively impact the upcoming quarterly results.

Encouraging Q3 Projections

For third-quarter 2020, the company expects total revenues to increase 2% year over year versus the prior guidance of a decline of 5-8%.  The Zacks Consensus Estimate for revenues is pegged at $1.87 billion, indicating growth of 0.4% from the year-ago reported figure.

For the quarter, Professional Instrumentation segment revenues are expected to increase 1% versus prior expectation of mid-single digit to low-single digit year-over-year decline. The Zacks Consensus Estimate for revenues from Professional Instrumentation is pegged at $1.13 billion, indicating a 1.5% year-over-year increase.

Also, Industrial Technologies revenues are expected to increase 4.5% versus prior guidance of low-single digit year-over-year increase. The Zacks Consensus Estimate for revenues from the Industrial Technologies segment for the to-be-reported quarter is pegged at $704 million, suggesting a 5.4% year-over-year decline.

Fortive anticipates positive year-over-year growth in both operating profit and adjusted operating profit for the quarter.

The Zacks Consensus Estimate for earnings is currently pegged at 86 cents per share, indicating a decline of 1.15% from the year-ago quarter.

Let’s see how things have shaped up for this announcement.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Fortive this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company has an Earnings ESP of +2.33%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Fortive has a Zacks Rank #4 (Sell).

Stocks That Warrant a Look

Here are a few stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

Alphabet GOOGL has an Earnings ESP of +7.40% and holds a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

TE Connectivity Ltd. TEL has an Earnings ESP of +5.40% and a Zacks Rank #2.

Netflix, Inc. NFLX has an Earnings ESP of +11.35% and holds a Zacks Rank of 3.

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