Head to Head Analysis: Fortive (NYSE:FTV) & Timken (NYSE:TKR)

Fortive (NYSE:FTV) and Timken (NYSE:TKR) are both industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Earnings and Valuation

This table compares Fortive and Timken”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fortive	$4.40 billion	4.51	$579.20 million	$2.10	31.26
Timken	$4.58 billion	1.74	$288.40 million	$3.69	31.14

Fortive has higher earnings, but lower revenue than Timken. Timken is trading at a lower price-to-earnings ratio than Fortive, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Fortive has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, Timken has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500.

Dividends

Fortive pays an annual dividend of $0.28 per share and has a dividend yield of 0.4%. Timken pays an annual dividend of $1.44 per share and has a dividend yield of 1.3%. Fortive pays out 13.3% of its earnings in the form of a dividend. Timken pays out 39.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Fortive has raised its dividend for 2 consecutive years and Timken has raised its dividend for 12 consecutive years. Timken is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Fortive and Timken, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fortive	2	9	2	0	2.00
Timken	0	3	7	0	2.70

Fortive presently has a consensus target price of $64.36, indicating a potential downside of 1.97%. Timken has a consensus target price of $145.00, indicating a potential upside of 26.18%. Given Timken’s stronger consensus rating and higher probable upside, analysts plainly believe Timken is more favorable than Fortive.

Institutional and Insider Ownership

94.9% of Fortive shares are held by institutional investors. Comparatively, 89.1% of Timken shares are held by institutional investors. 0.7% of Fortive shares are held by insiders. Comparatively, 8.1% of Timken shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Fortive and Timken’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fortive	14.83%	15.79%	8.36%
Timken	5.43%	12.63%	6.21%

Summary

Timken beats Fortive on 9 of the 17 factors compared between the two stocks.

About Fortive

Fortive Corporation designs, develops, manufactures, and services professional and engineered products, software, and services in the United States, China, and internationally. It operates in three segments: Intelligent Operating Solutions, Precision Technologies, and Advanced Healthcare Solutions. The Intelligent Operating Solutions segment provides advanced instrumentation, software, and services, including electrical test and measurement, facility and asset lifecycle software applications, and connected worker safety and compliance solutions for manufacturing, process industries, healthcare, utilities and power, communications and electronics, and other industries. This segment markets its products and services under the ACCRUENT, FLUKE, GORDIAN, INDUSTRIAL SCIENTIFIC, INTELEX, PRUFTECHNIK, and SERVICECHANNEL brands. The Precision Technologies segment offers electrical test and measurement, sensing and material technologies for industrial, power and energy, automotive, medical equipment, food and beverage, aerospace and defense, semiconductor, and other general industries under the ANDERSON-NEGELE, GEMS, SETRA, HENGSTLER-DYNAPAR, QUALITROL, PACIFIC SCIENTIFIC, KEITHLEY, and TEKTRONIX brand names. The Advanced Healthcare Solutions segment provides critical workflow solutions comprising instrument sterilization, instrument tracking, design and manufacture of cell therapy equipment, biomedical test tools, radiation detection and safety monitoring, and end-to-end clinical productivity software and solutions under the ASP, CENSIS, CENSITRAC, EVOTECH, FLUKE BIOMEDICAL, INVETECH, LANDAUER, PROVATION, RAYSAFE, and STERRAD brands. Fortive Corporation was incorporated in 2015 and is headquartered in Everett, Washington.

About Timken

The Timken Company designs, manufactures, and sells engineered bearings and industrial motion products, and related services in the United States and internationally. The company's Engineered Bearings segment provides various bearing products, including tapered, spherical, and cylindrical roller bearings; plain bearings, metal-polymer bearings, and rod end bearings; radial, angular, and precision ball bearings; thrust and specialty ball bearings; journal bearings; and housed or mounted bearings. This segment serves wind energy, agriculture, construction, food and beverage, metals and mining, automotive and truck, aerospace, rail, and other industries under the Timken, GGB, and Fafnir brands. Its Industrial Motion segment offers a portfolio of engineered products comprising industrial drives, automatic lubrication systems, linear motion products and systems, chains, belts, seals, couplings, filtration systems, and industrial clutches and brakes. It also provides industrial drivetrain and bearing repairing services. This segment serves a range of industries, such as solar energy, automation, construction, agriculture and turf, passenger rail, marine, aerospace, packaging and logistics, medical, and others under the Philadelphia Gear, Cone Drive, Rollon, Nadella, Groeneveld, BEKA, Diamond, Drives, Timken Belts, Spinea, Des-Case, Lagersmit, Lovejoy, and PT Tech brands. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.