Fortive Corp (FTV)

Conclusion

Fortive Corp makes instruments, software and services for industrial and healthcare customers, including the Fluke, Industrial Scientific and Provation brands. At a price of 67.10 USD on 2026-11-09, the company has a market capitalisation of 19.97 billion USD and an enterprise value of 23.11 billion USD.

The verdict is overvalued. The fair value band runs from 40.06 to 60.10 USD with a midpoint of 50.08 USD, giving a margin of safety of -25.4% at the current price. Every multiple trades above its own ten-year median: the P/E of 30.6 against a median of 24.1, and the P/S of 4.54 against 3.43. The DCF gives 47.38 USD per share at a discount rate of 9.61%, and the fair value from historical multiples is 52.78 USD. The reverse DCF implies revenue growth of 6.9% a year, while revenue has compounded at only 2.1% over five years and free cash flow per share has fallen at an annual rate of 4.2% over the same period.

Balance-sheet strength and cash generation support the case. Free cash flow conversion is 166.5% on a trailing basis, the Altman Z-score is 3.53, and the share count has fallen at an annual rate of 2.3% over five years. The weakest numbers are the 3-year revenue CAGR of -4.1%, the 5-year EPS CAGR of -16.6%, and the net debt to EBITDA of 2.59. If growth does not pick up towards the 6.9% the price implies, the gap to the fair value band is likely to persist.

Financial health

Financial strength is green, held up by an Altman Z-score of 3.53 and a current ratio of 1.23, and held back only by a net debt to EBITDA of 2.59 and an interest coverage of 6.39. The quick ratio is 0.81 and the debt to equity ratio is 0.59. The Altman model was designed for manufacturers, and Fortive's products fall within that group, so the zone is a reasonable guide: the Z-score sits in the safe zone. Insolvency risk: low, about 0.4% by the estimate of the Ohlson model over one to two years. The Ohlson figure is an estimate, not a forecast, and it is based on balance-sheet data as of 2025-12-31.

Earnings quality

Earnings quality is green. Free cash flow conversion is 166.5% on a trailing basis and 157.9% over five years, and the accrual ratio is -3.5%, meaning reported earnings are backed by cash. Stock-based compensation is 2.0% of revenue, leaving free cash flow after stock compensation at 999.5 million USD. The Piotroski score is 7 out of 9. The Beneish M-score is not available. The company beat earnings estimates in 6 of the last 8 quarters, with an average surprise of 6.6%. Analysts raised the current-year estimate by 3.6% over 90 days, with 10 upward revisions and no downward ones in the last 30 days.

Profitability

Profitability is green. The gross margin is 63.5% against a ten-year median of 56.9%, the operating margin is 19.6% against 18.0%, and the net margin is 14.8% against 14.1%. The operating margin has a stability measure of 15.2%. Return on invested capital is 8.7% against a WACC of 8.8%, so the given difference is -0.1%, which is neutral. Return on equity is 11.0%. The DuPont split for 2025 shows a net margin of 11.3%, an asset turnover of 0.44 and an equity multiplier of 1.82, so leverage contributes only modestly to the return on equity.

Growth

Growth is yellow. Revenue compounded at -4.1% over three years, 2.1% over five years and -1.8% over ten years. Earnings per share fell at -4.7% over three years, -16.6% over five years and -3.2% over ten years. Free cash flow per share compounded at -2.9% over three years, -4.2% over five years and 1.8% over ten years. Revenue grew in 7 of the last 10 comparable years. Consensus expects next-year earnings per share to grow by 6.3%, which would be a turnaround from the recent trend.

Valuation

Valuation is red. Today's P/E of 30.6 is a premium of 27.1% to its ten-year median of 24.1, the EV to EBITDA of 19.1 is a premium of 13.2% to 16.9, the P/FCF of 18.4 is a premium of 13.7% to 16.2, the P/S of 4.54 is a premium of 32.6% to 3.43, and the P/B of 3.36 is a premium of 48.8% to 2.26. The DCF gives 47.38 USD per share at a discount rate of 9.61%, and about 50.9% of that value sits in the terminal value. The reverse DCF implies growth of 6.9%, against a revenue CAGR of 5 years of 2.1%, a gap given as 4.8%. The fair value is an order of magnitude built on fixed assumptions, not a price target. The dividend yield is 0.38% and the payout on free cash flow is 7.0%.

Risks

The main risk is that growth stays near its recent level. Revenue CAGR of 2.1% over five years and the 3-year figure of -4.1% fall well short of the 6.9% implied by the price, which would leave the margin of safety at -25.4% in place. A net debt to EBITDA of 2.59 and an interest coverage of 6.39 leave less room for error if earnings weaken. The ROIC of 8.7% sits right at the WACC of 8.8%, so value creation from new investment is limited. The Beneish M-score is not available, so earnings manipulation risk could not be tested with that tool. This analysis does not include a debt maturity schedule or revenue by segment, so refinancing timing and the contribution of each business line cannot be judged.