<div id="readability-page-1"><div><h3>Key Insights</h3><ul><li> The projected fair value for Fortive is US$53.12 based on 2 Stage Free Cash Flow to Equity </li> <li> Current share price of US$55.69 suggests Fortive is potentially trading close to its fair value </li> <li>  Analyst price target for FTV is US$57.75, which is 8.7% above our fair value estimate </li> </ul><p>In this article we are going to estimate the intrinsic value of Fortive Corporation (NYSE:FTV) by taking the expected future cash flows and discounting them to today's value.  This will be done using the Discounted Cash Flow (DCF) model.  Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.</p><p> Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation.  Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. </p><p>AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.</p><h2> The Model </h2> <p> We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase.  To start off with, we need to estimate the next ten years of cash flows.   Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.  </p><p> A DCF is all about the idea that a dollar in the future is less valuable than a dollar today,  so we discount the value of these future cash flows to their estimated value in today's dollars: </p><h4> 10-year free cash flow (FCF) forecast </h4><table><tbody><tr><td> </td><td><strong>2026</strong></td><td><strong>2027</strong></td><td><strong>2028</strong></td><td><strong>2029</strong></td><td><strong>2030</strong></td><td><strong>2031</strong></td><td><strong>2032</strong></td><td><strong>2033</strong></td><td><strong>2034</strong></td><td><strong>2035</strong></td></tr><tr><td><strong> Levered FCF ($, Millions) </strong></td><td>US$979.9m</td><td>US$1.03b</td><td>US$1.04b</td><td>US$1.05b</td><td>US$1.07b</td><td>US$1.10b</td><td>US$1.12b</td><td>US$1.16b</td><td>US$1.19b</td><td>US$1.23b</td></tr><tr><td><strong>Growth Rate Estimate Source</strong></td><td>Analyst x7</td><td>Analyst x3</td><td>Analyst x1</td><td>Est @ 1.33%</td><td>Est @ 1.91%</td><td>Est @ 2.31%</td><td>Est @ 2.60%</td><td>Est @ 2.80%</td><td>Est @ 2.94%</td><td>Est @ 3.03%</td></tr><tr><td><strong> Present Value ($, Millions) Discounted @ 8.8% </strong></td><td>US$901</td><td>US$872</td><td>US$806</td><td>US$750</td><td>US$703</td><td>US$661</td><td>US$624</td><td>US$589</td><td>US$558</td><td>US$528</td></tr></tbody></table><p><i>(&#34;Est&#34; = FCF growth rate estimated by Simply Wall St)</i><br/><strong>Present Value of 10-year Cash Flow (PVCF)</strong> = US$7.0b</p><p> The second stage is also known as Terminal Value, this is the business's cash flow after the first stage.  For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.8%. </p><p><strong>Terminal Value (TV)</strong>= FCF<sub>2035</sub> × (1 + g) ÷ (r – g) = US$1.2b× (1 + 3.3%) ÷ (8.8%– 3.3%) = US$23b</p><p><strong>Present Value of Terminal Value (PVTV)</strong>= TV / (1 + r)<sup>10</sup>= US$23b÷ ( 1 + 8.8%)<sup>10</sup>= US$9.9b</p><p> The total value, or equity value, is then the sum of the present value of the future cash flows,  which in this case is US$17b.  In the final step we divide the equity value by the number of shares outstanding.  Relative to the current share price of US$55.7, the company appears   around fair value    at the time of writing.   Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. </p><figure><img height="760" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/318505463-dcf-1-dark-2/1766838301278?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1706" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/asset/chart/318505463-dcf-1-dark-2/1766838301278"/><figcaption>NYSE:FTV Discounted Cash Flow December 27th 2025</figcaption></figure> <h2> Important Assumptions </h2><p> We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.  You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at Fortive as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 8.8%, which is based on a levered beta of 1.195. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. </p> <p><span> See our latest analysis for Fortive </span></p><h3>SWOT Analysis for Fortive</h3><div><div><p><strong>Strength</strong></p><ul><li>Earnings growth over the past year exceeded the industry.</li></ul> <ul><li>Debt is well covered by earnings and cashflows.</li></ul> <ul>Balance sheet summary for FTV.</ul> </div><div><p><strong>Weakness</strong></p><ul><li>Dividend is low compared to the top 25% of dividend payers in the Machinery market.</li></ul> <ul><li>Expensive based on P/E ratio and estimated fair value.</li></ul> </div><div><p><strong>Opportunity</strong></p><ul><li> FTV's financial characteristics indicate limited near-term opportunities for shareholders.</li></ul></div><div><p><strong>Threat</strong></p><ul><li>Annual earnings are forecast to decline for the next 3 years.</li></ul> <ul> What else are analysts forecasting for FTV?</ul> </div></div><h2> Looking Ahead: </h2><p> Although the valuation of a company is important, it  shouldn't be the only metric you look at when researching a company.  The DCF model is not a perfect stock valuation tool.  Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued.  If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different.  For Fortive, we've put together three  relevant  items  you should further examine: </p><ol> <li> <strong>Risks</strong>: You should be aware of the <strong>2 warning signs for Fortive</strong> (1 is significant!) we've uncovered before considering an investment in the company. </li> <li> <strong>Management</strong>:Have insiders been ramping up their shares to take advantage of the market's sentiment for FTV's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors. </li><li> <strong>Other Solid Businesses</strong>: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! </li> </ol><p> PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks just search here.</p><div><p>Mobile Infrastructure for Defense and Disaster</p><p>The next wave in robotics isn't humanoid. Its fully autonomous towers delivering 5G, ISR, and radar in under 30 minutes, anywhere.</p><p>Get the investor briefing before the next round of contracts</p><p><span>Sponsored On Behalf of CiTech</span></p></div></div></div>

<p>The fair value of Fortive Corporation (NYSE:FTV) is estimated at $53.12 using a 2-stage Free Cash Flow to Equity model. The current share price is $55.69, close to this fair value. Analysts' price target is $57.75. The valuation uses a Discounted Cash Flow (DCF) model, considering future cash flows and discounting them to present value. The total equity value is $17 billion, suggesting the stock is fairly valued. Important inputs include the discount rate (8.8%) and cash flow estimates.</p>

Estimating The Fair Value Of Fortive Corporation (NYSE:FTV)