Fortive Corporation (FTV) DCF Valuation & Fundamental Primer
Fortive Corporation (FTV) currently trades at $53.81 with an enterprise value of $23.88B. Our proprietary institutional model rates Fortive Corporation at 67/100 (Grade: B+ · Quality Software Operator). The current market price prices in an implied 5-year revenue CAGR of 4.9% vs. historical growth of 7.7% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of Fortive Corporation (FTV) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Fortive Corporation (FTV) 3-Scenario DCF Valuation Range
Stress-test FTV's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $53.81).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $69.32 +29% | $74.09 +38% | $79.66 +48% | $86.24 +60% | $94.14 +75% |
| 9.3% | $61.51 +14% | $65.27 +21% | $69.59 +29% | $74.60 +39% | $80.48 +50% |
| 10.0% | $55.09 +2% | $58.12 +8% | $61.54 +14% | $65.46 +22% | $69.97 +30% |
| 10.8% | $49.72 -8% | $52.19 -3% | $54.96 +2% | $58.09 +8% | $61.65 +15% |
| 11.5% | $45.15 -16% | $47.20 -12% | $49.48 -8% | $52.02 -3% | $54.89 +2% |
Institutional Software Quality Scorecard (67/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Strong cash conversion; 100%+ of operating profit turns into free cash
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- High cash conversion: 100%+ of operating income converted to free cash flow
- Low dilution friction: SBC is only 1.8% of revenue
Key Operational & Dilution Risks
- Lower software gross margins (59.9%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into FTV?
Market implies 4.9% annual revenue growth over next 5 years (6.1% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (1.8% of revenue) and annual share dilution (0.2%/yr). Accounting for both requires 6.1% 5-year revenue CAGR to justify $53.81/sh on a true per-share economic cash flow basis.
Fortive Corporation (FTV) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $6.23B | $6.23B | $6.71B | $7.23B | $7.78B | $8.38B | $9.02B |
| Gross Profit | $3.73B | $3.73B | $4.02B | $4.33B | $4.66B | $5.02B | $5.40B |
| Operating Income (EBIT) | $1.18B | $1.18B | $1.27B | $1.36B | $1.47B | $1.58B | $1.70B |
| Stock-Based Compensation (SBC) | $109.2M | $109.1M | $117.4M | $126.5M | $136.2M | $146.6M | $157.9M |
| Unlevered Free Cash Flow (FCF) | $1.41B | $1.41B | $1.51B | $1.63B | $1.76B | $1.89B | $2.04B |
| SBC-Adjusted True Cash Flow | $1.30B | $1.30B | $1.40B | $1.50B | $1.62B | $1.74B | $1.88B |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -16.0 + 0.55 × (Rule of 40) · R² = 74%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Fortive Corporation | FTV | $18.25B | $6.23B | 59.9% | 22.6% | 30.3% | 1.8% | 3.4× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 3.4× | $21.31B | $18.25B | $53.81 | 0.0% |
| -20% Multiple Compression | 2.7× | $17.05B | $13.98B | $41.24 | -20.0% |
| -35% Multiple Compression | 2.2× | $13.85B | $10.79B | $31.81 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $31.16B | $28.10B | $82.86 | +46.2% |
Frequently Asked Questions: Fortive Corporation (FTV) Valuation
What is Fortive Corporation (FTV)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Fortive Corporation (FTV) has a Base Case implied value of $61.39 per share (with a Bear Case of $29.72 and a Bull Case of $98.05), compared to its current price of $53.81. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Fortive Corporation (FTV)'s Rule of 40 score and Free Cash Flow margin?
Fortive Corporation achieves a Rule of 40 score of 30.3%, combining a 7.7% revenue growth run-rate with a 22.6% TTM free cash flow margin on $6.23B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into FTV stock according to Reverse-DCF analysis?
At $53.81 per share (Enterprise Value of $21.31B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 4.9%, compared to Fortive Corporation's historical CAGR of 7.7%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does Fortive Corporation compare to Software & Cloud Services software peers?
Fortive Corporation (FTV) earns an institutional Software Quality Score of 67/100 (Grade B+ — Quality Software Operator). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Fortive Corporation (FTV)'s valuation?
Fortive Corporation recorded $109.2M in TTM stock-based compensation (1.8% of revenue). When treating SBC as a cash-equivalent compensation expense, Fortive Corporation's SBC-adjusted free cash flow yield is 7.1%, scoring 25/25 on our Shareholder Dilution Friction pillar.