Fortive raises EPS outlook to $3.10–$3.14 after 13.2% quarterly growth
Key Facts
Fortive raised its adjusted diluted earnings per share outlook for fiscal 2026 to a range of $3.10–$3.14, equivalent to growth of about 15% at the midpoint year over year. The move came with the release of third-quarter results, which showed adjusted diluted EPS rising to $0.77 from $0.68 a year earlier, an increase of 13.2%. The quarterly result also beat the LSEG analyst consensus estimate of $0.70, according to Reuters coverage. The company said the higher outlook reflects strong performance year to date and confidence in its business trajectory. The stock rose about 4% in premarket trading to $64, then jumped about 8% in morning trading on October 28 after the results and new guidance.
Revenue was $1.108 billion in the third quarter, compared with $1.027 billion in the same period, a reported increase of 7.8%. Core revenue growth was 7.2%, a measure that excludes the effects of certain items, according to the company. Favorable pricing contributed two percentage points and three-tenths to core growth, while volume growth added four percentage points and nine-tenths, Fortive disclosed. The larger contribution from volume indicates that higher sales quantities were the stronger driver of the two factors cited. On a GAAP basis, the company reported EPS of $0.57, compared with $0.35 a year earlier, an increase of 62.9%.
GAAP net income rose to $173 million from $117 million, up 47.4% year over year. Adjusted earnings before interest, taxes, depreciation and amortization were $339 million, compared with $309 million, an increase of 9.5%. The margin on this measure widened to 30.6% from 30.1% a year earlier, an increase of 50 basis points. The chief executive said the quarter recorded core growth of more than 7%, an increase of nearly 10% in adjusted earnings before interest, taxes, depreciation and amortization, and 13% growth in adjusted EPS. He added that this marked the “fifth consecutive quarter of double-digit adjusted EPS growth.”
Performance varied across the company's two segments, with the Intelligent Operating Solutions segment posting core revenue growth of 9.1% in the third quarter. The segment's adjusted earnings before interest, taxes, depreciation and amortization margin rose to 35.8% from 34.6% in the same period. The Advanced Healthcare Solutions segment recorded core revenue growth of 3.1%. Its adjusted earnings before interest, taxes, depreciation and amortization margin fell to 25.8% from 28.1%. Thus, both segments delivered revenue growth, alongside margin improvement in the first and a decline in the second, according to company figures.
Free cash flow was $284 million, compared with $266 million in the third quarter of the previous year, an increase of 6.7%. Operating cash flow reached $313 million, versus $295 million, up 6.3%. Fortive said it repurchased about $300 million of shares during the quarter, representing about 5 million shares, or about 2% of diluted shares outstanding. Since the launch of New Fortive, total share repurchases have reached about $2.3 billion, or approximately 43 million shares and about 13% of shares outstanding. The figures place cash flow and buybacks among the period's results, according to the company's statement.
Fortive expects reported fiscal 2026 revenue to be slightly above $4.4 billion and core revenue growth to exceed 5% by a small margin. For the fourth quarter, the company expects the impact of four fewer selling days compared with the same period. It estimated that this would reduce revenue by about $15 million to $20 million and put 150 basis points of pressure on core growth. This expected impact comes as the company raised its full-year EPS range to $3.10–$3.14. Fortive shares closed at $60.25 on October 23, $60.78 on October 26 and $61.62 on October 27, according to EL7 data.