- Fortive surpassed sell-side expectations in the second quarter, with strong short-cycle momentum, but also double-digit growth in the software businesses.
- The short-cycle rebound isn't over, and businesses like Accruent and Gordian should accelerate further, while the healthcare ops are more vulnerable to COVID-19 in the short term.
- Fortive is back to M&A the $1.2B deal for ServiceChannel could be a template for future deals - relatively high initial multiples for higher longer-term recurring revenue and margins.
- Between a comparable multiple approach using other compounder-type companies and a cash flow model including estimated M&A, I believe Fortive is more or less fairly-valued.
For further details see:
Fortive Setting Out To Show It Has Crafted A Durable And Superior Compounder Business Model