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Fortive to Split Into Two Public Companies: Beneficial for the Stock?
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Fortive Corporation (FTV - Free Report) has announced its plans to pursue a tax-free spin-off of its Precision Technologies segment and form two independent, publicly traded companies with separate business models and investment policies. The spin-off is expected to be completed in the fourth quarter of 2025, pending certain conditions. Post this announcement, the stock gained 3.5% in the pre-market trading hours on Sept. 5.
The spin-off will involve pro rata distribution of shares of the new company holding the Precision Technologies assets and liabilities to Fortive shareholders, and it is designed to qualify as a tax-free transaction under U.S. federal income tax laws. Fortive will further detail this announcement on a conference call scheduled for Thursday.
The newly formed company will encompass the leading brands from the existing Precision Technologies segment, continuing to leverage Fortive Business Segment’s growth and innovation strengths. The new company will focus on its key technologies in test and measurement, specialty sensors and aerospace and defense subsystems. With improving margins and cash flow performance, the entity will be well-equipped to invest in organic growth, return cash to shareholders and pursue merger & acquisition opportunities.
Until the spin-off, Fortive will use about 75% of its free cash flow for share repurchases, with the rest going to dividends and debt reduction. This will ensure strong balance sheets after separation. Post-spin-off, Fortive will focus on recurring revenues and software, positioning itself for accelerated growth and increased earnings whereas Precision Technologies will thrive independently by leveraging key technology trends, highlighted Fortive.
FTV has reaffirmed its third-quarter and full-year 2024 outlook. It continues to expect its share buyback program to boost earnings per share growth in 2025.
Status of Fortive Post Spin-off
Following the spin-off, Fortive will retain two business segments — Intelligent Operating Solutions and Advanced Healthcare Solutions. The company’s technology solutions, generating about 50% recurring revenues, are designed to enhance productivity, safety and reliability.
In the last reported quarter, Fortive’s revenues rose 2% year over year to $1.55 billion, aided by continued momentum in the Fortive Business System. Steady momentum in Intelligent Operating Solutions and Advanced Healthcare Solutions segments acted as a catalyst.
The Intelligent Operating Solutions segment generated revenues of $677 million (contributing 43.6% to total revenues), up 4% on a year-over-year basis, and the Advanced Healthcare Solutions segment registered revenues of $324 million (20.9%), up 3% year over year. However, Precision Technologies segmental revenues totaled $552 million (35.5%), down 1.5% year over year.
Headquartered in Everett, WA, Fortive is a diversified industrial growth company. It provides essential technologies for connected workflow solutions on a global basis.
FTV’s Zacks Rank & Stock Price Performance
FTV currently carries a Zacks Rank #3 (Hold). Shares of the company have lost 7.7% in the past year against the sub-industry’s growth of 8.1%.
Manhattan Associates delivered an earnings surprise of 26.6%, on average, in the trailing four quarters. In the last reported quarter, MANH pulled off an earnings surprise of 22.9%. The Zacks Consensus Estimate for MANH has increased 9.2% in the past 60 days to $4.26.
ANSYS delivered an earnings surprise of 4.8%, on average, in three of the trailing four quarters. In the last reported quarter, ANSS pulled off an earnings surprise of 28.9%. It has a long-term earnings growth expectation of 6.4%.
Adobe delivered an earnings surprise of 2.7%, on average, in the trailing four quarters. In the last reported quarter, ADBE pulled off an earnings surprise of 2.1%. It has a long-term earnings growth expectation of 13%.
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Fortive to Split Into Two Public Companies: Beneficial for the Stock?
Fortive Corporation (FTV - Free Report) has announced its plans to pursue a tax-free spin-off of its Precision Technologies segment and form two independent, publicly traded companies with separate business models and investment policies. The spin-off is expected to be completed in the fourth quarter of 2025, pending certain conditions. Post this announcement, the stock gained 3.5% in the pre-market trading hours on Sept. 5.
The spin-off will involve pro rata distribution of shares of the new company holding the Precision Technologies assets and liabilities to Fortive shareholders, and it is designed to qualify as a tax-free transaction under U.S. federal income tax laws. Fortive will further detail this announcement on a conference call scheduled for Thursday.
The newly formed company will encompass the leading brands from the existing Precision Technologies segment, continuing to leverage Fortive Business Segment’s growth and innovation strengths. The new company will focus on its key technologies in test and measurement, specialty sensors and aerospace and defense subsystems. With improving margins and cash flow performance, the entity will be well-equipped to invest in organic growth, return cash to shareholders and pursue merger & acquisition opportunities.
Until the spin-off, Fortive will use about 75% of its free cash flow for share repurchases, with the rest going to dividends and debt reduction. This will ensure strong balance sheets after separation. Post-spin-off, Fortive will focus on recurring revenues and software, positioning itself for accelerated growth and increased earnings whereas Precision Technologies will thrive independently by leveraging key technology trends, highlighted Fortive.
Fortive Corporation Price and Consensus
Fortive Corporation price-consensus-chart | Fortive Corporation Quote
FTV has reaffirmed its third-quarter and full-year 2024 outlook. It continues to expect its share buyback program to boost earnings per share growth in 2025.
Status of Fortive Post Spin-off
Following the spin-off, Fortive will retain two business segments — Intelligent Operating Solutions and Advanced Healthcare Solutions. The company’s technology solutions, generating about 50% recurring revenues, are designed to enhance productivity, safety and reliability.
In the last reported quarter, Fortive’s revenues rose 2% year over year to $1.55 billion, aided by continued momentum in the Fortive Business System. Steady momentum in Intelligent Operating Solutions and Advanced Healthcare Solutions segments acted as a catalyst.
The Intelligent Operating Solutions segment generated revenues of $677 million (contributing 43.6% to total revenues), up 4% on a year-over-year basis, and the Advanced Healthcare Solutions segment registered revenues of $324 million (20.9%), up 3% year over year. However, Precision Technologies segmental revenues totaled $552 million (35.5%), down 1.5% year over year.
Headquartered in Everett, WA, Fortive is a diversified industrial growth company. It provides essential technologies for connected workflow solutions on a global basis.
FTV’s Zacks Rank & Stock Price Performance
FTV currently carries a Zacks Rank #3 (Hold). Shares of the company have lost 7.7% in the past year against the sub-industry’s growth of 8.1%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the broader technology space are Manhattan Associates, Inc. (MANH - Free Report) , ANSYS, Inc. (ANSS - Free Report) and Adobe Inc. (ADBE - Free Report) . MANH presently sports a Zacks Rank #1 (Strong Buy), whereas ANSS & ADBE carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Manhattan Associates delivered an earnings surprise of 26.6%, on average, in the trailing four quarters. In the last reported quarter, MANH pulled off an earnings surprise of 22.9%. The Zacks Consensus Estimate for MANH has increased 9.2% in the past 60 days to $4.26.
ANSYS delivered an earnings surprise of 4.8%, on average, in three of the trailing four quarters. In the last reported quarter, ANSS pulled off an earnings surprise of 28.9%. It has a long-term earnings growth expectation of 6.4%.
Adobe delivered an earnings surprise of 2.7%, on average, in the trailing four quarters. In the last reported quarter, ADBE pulled off an earnings surprise of 2.1%. It has a long-term earnings growth expectation of 13%.