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    FTV · NYQ · Technology

    Fortive Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 12.06

    Market price

    USD 55.00

    Implied upside

    -78.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 12.06-78.1%
    Exit multiple
    USD 21.54-60.8%
    Market price
    USD 55.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m454m908mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 3.7bnUSD 3.3bnUSD 3.0bnUSD 2.7bnUSD 2.4bn-10.6%
    EBITUSD 620.7mUSD 554.7mUSD 495.8mUSD 443.1mUSD 396.0m-10.6%
    NOPATUSD 567.2mUSD 506.9mUSD 453.1mUSD 404.9mUSD 361.9m-10.6%
    Add depreciation & amortisationUSD 371.4mUSD 331.9mUSD 296.6mUSD 265.1mUSD 237.0m-10.6%
    Less capital expenditureUSD -68.3mUSD -61.0mUSD -54.6mUSD -48.8mUSD -43.6m-10.6%
    Less increase in working capitalUSD 38.1mUSD 34.1mUSD 30.4mUSD 27.2mUSD 24.3m+10.6%
    Free cashflow to firmUSD 908.3mUSD 811.8mUSD 725.6mUSD 648.5mUSD 579.6m-10.6%
    Discount factor0.95590.87360.79830.72950.6666-
    Present valueUSD 868.3mUSD 709.2mUSD 579.2mUSD 473.1mUSD 386.4m-18.3%
    Present Value Of The ForecastUSD 3.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.982Reported 0.973, pulled toward 1.0 (Blume)
    Cost of equity10.40%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 16.6bn83.4% of capital
    Total debtUSD 3.3bn16.6% of capital, book value as a proxy
    Tax rate8.6%Effective, capped at statutory
    WACC9.43%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 12.06

    57% of EV

    Forecast FCFF, final year
    USD 579.6m
    Capex at depreciation, working capital in reinvestment
    USD 545.1m
    Less reinvestment at g/ROIC (26.5% of NOPAT)
    USD -144.5m
    Capitalised
    USD 400.6m
    ROIC (WACC floor)
    9.4%
    Terminal value, undiscounted
    USD 5.9bn
    Terminal value, discounted
    USD 3.9bn
    Enterprise value
    USD 7.0bn
    Less net debt
    USD 2.9bn
    Equity value
    USD 4.0bn

    Exit at 16.9x EBITDA

    Value per shareUSD 21.54

    70% of EV

    Terminal value, undiscounted
    USD 10.7bn
    Terminal value, discounted
    USD 7.1bn
    Enterprise value
    USD 10.1bn
    Less net debt
    USD 2.9bn
    Equity value
    USD 7.2bn

    Spread between methods: 56%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.43%16.7316.8116.8916.9717.05
    8.43%14.0614.1314.1914.2614.33
    9.43%11.9412.0012.0612.1212.17
    10.43%10.2310.2810.3310.3810.43
    11.43%8.818.858.908.948.98

    Outlined: this model. Green text: above today's price of 55.00. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-10.6%17.3%+27.9pp
    EBIT margin16.7%69.9%+53.3pp
    Discount rate9.4%4.0%-5.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.