Index removal puts Fortive in focus for portfolio trackers

Fortive (FTV) has come under the spotlight after being removed from the Russell 1000 Dynamic Index, a change that can prompt adjustments by index-tracking funds and other institutional investors.

For individual shareholders, index changes like this often raise questions about how much trading is driven by mechanical rebalancing rather than shifts in views on a company’s fundamentals. In Fortive’s case, the event arrives while its Fluke subsidiary has been receiving industry awards for calibration software and for laser shaft alignment technology, giving investors two very different data points to weigh.

At a share price of US$61.48, Fortive’s stock has had a relatively firm run over the past few months, with an 11.22% 90 day share price return and an 18.46% one year total shareholder return suggesting momentum has been positive despite the index removal.

If this index change has you rethinking where growth or resilience could come from next, it may be worth scanning beyond industrials and checking out 35 power grid technology and infrastructure stocks

With Fortive trading at US$61.48, sitting close to analyst targets and carrying an intrinsic discount estimate of around 12%, investors now have to ask: is there real upside left here, or is the market already pricing in future growth?

Most Popular Narrative: 14.6% Undervalued

Compared with Fortive’s last close at $61.48, the most followed narrative pegs fair value at $72.00, framing the index exit against a richer long term story.

The company's clear leadership in digital transformation and connected workflow solutions, evidenced by strong momentum in cloud-based products, AI-enabled customer retention, and market-leading SaaS innovation, directly positions Fortive to capture outsized share of the long-term surge in industrial automation and digitalization, creating a powerful, compounding runway for revenue and EBITDA growth.

Curious what justifies a higher fair value than today’s Fortive share price? The narrative leans heavily on earnings power, margin lift, and a future profit multiple that assumes real staying power in its core platforms.

Result: Fair Value of $72.00 (UNDERVALUED)

However, Fortive’s bullish narrative still faces pressure from ongoing supply chain disruptions and the possibility that hardware heavy exposure leaves it vulnerable if software growth underdelivers.

Another View: Fortive on Earnings Multiples

While the SWS DCF model suggests Fortive is undervalued with a fair value estimate of $70.02 versus the current $61.48, the P/E picture is less forgiving. Fortive trades on 33.7x earnings, richer than its 25.5x fair ratio, the US Machinery industry at 28.2x, and peers at 30.9x.

That gap means the share price already bakes in a relatively full earnings multiple. As a result, any slip in execution or sentiment could affect returns more quickly than a pure DCF view implies, leaving investors to ask which signal carries more weight.

Next Steps

With mixed signals around Fortive’s valuation and outlook, it makes sense to move quickly and check the underlying data yourself, starting with the 3 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Fortive?

If Fortive has sharpened your focus on where to put fresh capital to work, now is the moment to widen your lens and compare other high potential setups.

• Spot potential value standouts before they are crowded by institutions by scanning the screener containing 19 high quality undiscovered gems.
• Target companies where price and quality line up more tightly with your expectations by reviewing the 44 high quality undervalued stocks.
• Prioritise resilience and balance sheet strength so you are not caught off guard in tougher markets by filtering through the solid balance sheet and fundamentals stocks screener (48 results).

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.