Fortive’s third quarter was met with a positive market response, underscored by the company’s first full quarter operating as a streamlined entity following the Ralliance spin-off. Management attributed the quarter’s results to focused execution on organic growth and operational streamlining, including margin expansion initiatives and disciplined cost reductions. CEO Olumide Soroye highlighted the company’s progress in accelerating new product introductions, notably in its Fluke and ServiceChannel units, and intensified commercial efforts in high-growth sectors such as solar operations and data centers. Additionally, recurring revenue growth outpaced the company’s average, supported by enhanced software offerings and service plans.
Is now the time to buy FTV? Find out in our full research report (it’s free for active Edge members).
Fortive (FTV) Q3 CY2025 Highlights:
- Revenue: $1.03 billion vs analyst estimates of $1.01 billion (2.3% year-on-year growth, 1.8% beat)
- Adjusted EPS: $0.68 vs analyst estimates of $0.57 (19.5% beat)
- Adjusted EBITDA: $309.4 million vs analyst estimates of $279.7 million (30.1% margin, 10.6% beat)
- Management raised its full-year Adjusted EPS guidance to $2.65 at the midpoint, a 3.9% increase
- Operating Margin: 15.5%, down from 17.1% in the same quarter last year
- Organic Revenue rose 1.9% year on year vs analyst estimates of flat growth (191.8 basis point beat)
- Market Capitalization: $15.99 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Fortive’s Q3 Earnings Call
- Nigel Coe (Wolfe Research) asked about the sustainability of Q3’s margin performance and anticipated Q4 margin trends. CFO Mark D. Okerstrom explained that certain Q3 cost reductions were one-time items, with some savings being reinvested in growth initiatives in Q4.
- Deane Dray (RBC Capital Markets) inquired about the company’s capital allocation strategy post-spin, specifically balancing share buybacks and M&A. CEO Olumide Soroye stated that future capital deployment will weigh relative returns, with an emphasis on smaller, strategic bolt-on acquisitions over large deals.
- Scott Davis (Melius Research) requested an update on the Landauer radiation monitoring business. Soroye described Landauer as a strong, highly recurring business, with ongoing innovation to add new services for its extensive customer base.
- Julian Mitchell (Barclays) probed the impact of healthcare policy changes on demand in the Advanced Healthcare Solutions segment. Soroye noted sequential improvement in capital equipment and consumables demand, supported by increased customer certainty on reimbursement policies.
- Joe O’Dea (Wells Fargo) asked how the company’s “growth oxygen” initiative for its brands would translate into organic growth. Soroye detailed that the program identifies high-confidence opportunities for investment, aiming for short- and long-term organic growth acceleration.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of recurring revenue adoption, particularly within Fluke and healthcare software; (2) execution on growth investments and commercialization in high-growth verticals and geographies; and (3) the company’s ability to sustain margin discipline while reallocating savings into innovation. Continued clarity on healthcare funding and global tariff environments will also be key to assessing future progress.
Fortive currently trades at $50.34, up from $49.19 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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