| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 45.10 | -15 |
| Intrinsic value (DCF) | 24.38 | -54 |
| Graham-Dodd Method | 5.50 | -90 |
| Graham Formula | 19.60 | -63 |
Fortive Corporation (0IRE.L) is a diversified industrial technology company specializing in professional and engineered products, software, and services across multiple high-growth verticals. Headquartered in Everett, Washington, Fortive operates through three key segments: Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions. The company serves critical industries such as manufacturing, healthcare, utilities, aerospace, and electronics with brands like Fluke, Tektronix, and Landauer. Fortive's business model combines hardware, software, and data analytics to enhance operational efficiency, safety, and compliance for its customers. With a strong focus on innovation and recurring revenue streams from software subscriptions and services, Fortive maintains a competitive edge in industrial automation, test & measurement, and healthcare asset management. The company's global footprint and diversified portfolio position it well in the $1.5T+ industrial technology sector, benefiting from secular trends like Industry 4.0, digital transformation, and healthcare digitization.
Fortive presents an attractive investment case with its balanced mix of hardware and high-margin software/services (30%+ of revenue), diversified end-market exposure, and strong free cash flow generation (FCF margin ~20%). The company's 1.158 beta suggests moderate volatility relative to the market. While the 0.32 dividend yield is modest, Fortive has demonstrated consistent capital allocation through strategic M&A (notably the EA Elektro-Automatik acquisition) and share repurchases. Key risks include exposure to cyclical industrial capex (60% of revenue), integration challenges from its acquisitive growth strategy, and foreign exchange headwinds from its global operations. The current valuation at ~3.8x sales appears reasonable given Fortive's 5%+ organic growth profile and expanding margins in software businesses.
Fortive occupies a unique middle-market position in industrial technology, combining Danaher's operational excellence with more specialized product focus than broad industrials like Honeywell. Its competitive advantage stems from: 1) Niche leadership in test & measurement (Fluke, Tektronix) with 50%+ market share in several categories, 2) Recurring revenue from healthcare SaaS platforms (Censitrac, Evotech) growing 15% annually, and 3) Cross-selling opportunities across its 20+ acquired brands. Unlike pure-play competitors, Fortive benefits from shared R&D (5% of sales) and distribution across segments. However, it faces pressure from larger conglomerates (Siemens, Danaher) in enterprise software and smaller innovators in specialty sensors. The company's 'Fortive Business System' continuous improvement methodology drives industry-leading 23% operating margins in Precision Tech, though Healthcare margins (18%) lag peers like STERIS. Recent strategic shifts toward higher-growth automation and AI-enabled analytics (via Accruent, Intelex) position Fortive well against digital transformation trends, but require sustained R&D investment to maintain differentiation.