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Vontier Corp: Transportation & Mobility Stock to Ride Economi…

By George Leong, B.Comm. Published : September 23, 2021

Economic Renewal to Power Growth of Vontier Stock

Renewed growth in the domestic and global economies will drive the demand for transportation solutions. To play the economic renewal, I like the prospects of Vontier Corp (NYSE:VNT), a compelling stock in the global transportation and mobility segment.

Vontier provides technologies—hardware and software—to the transportation and mobility solutions area. These include integrated fueling solutions, data-driven fleet management, mobile asset management, and smart city infrastructure.

The company was spun off from Fortive Corp (NYSE:FTV) in October 2021.

My bull thesis for VNT stock is that companies in the transportation segment will need advanced logistic solutions to drive efficiencies and streamline costs.

VNT Stock Breaks Out

The below chart shows Vontier stock in its third upward wave since the start of this year.

A closer look shows VNT stock currently trying to break out around $35.00–$36.00, following a bullish double-bottom formation.

Failure to hold at $35.00 could see Vontier stock retrench toward $32.00–$33.00, followed by $30.00, which I would view as an opportunity.

Chart courtesy of StockCharts.com

Profitability & Free Cash Flow Machine

Vontier Corp’s revenues have steadily come in at $2.5 to $2.8 billion during the last four years. While the growth rate doesn’t jump out at you, it has been consistent, except in 2020, during the COVID-19 pandemic.

Fiscal Year Revenues (Billions) Growth
2017 $2.5 N/A
2018 $2.7 6.7%
2019 $2.8 4.0%
2020 $2.7 -2.4%

(Source: “Vontier Corp.” MarketWatch, last accessed September 21, 2021.)

Looking ahead, there’s optimism. Analysts estimate that Vontier will ramp up its revenue by 9.5% to $2.96 billion this year and by 1.1% to $2.99 billion in 2022. (Source: “Vontier Corporation (VNT),” Yahoo! Finance, last accessed September 21, 2021.)

Those estimates may be considered conservative if the global economy recovers at a faster clip than expected.

Also consider that Vontier Corp has consistently delivered earnings before interest, taxes, depreciation, and amortization (EBITDA) income.

Fiscal Year EBITDA (Millions) Growth
2017 $566.9 N/A
2018 $586.0 3.4%
2019 $647.6 10.5%
2020 $636.7 -1.7%

(Source: MarketWatch, op. cit.)

The company has also been delivering profitability on both a generally accepted accounting principles (GAAP) and adjusted earnings-per-share (EPS) basis.

Fiscal Year GAAP Diluted EPS Growth
2017 $2.20 N/A
2018 $2.29 3.3%
2019 $2.59 13.2%
2020 $2.02 -22.1%

(Source: MarketWatch, op. cit.)

The company’s outlook for profitability has been on the rise. Vontier Corp is expected to report an adjusted $2.80 per diluted share this year, followed by $2.88 per diluted share in 2022. (Source: Yahoo! Finance, op. cit.)

Since its spin-off about a year ago, Vontier Corp has beaten the consensus EPS estimates in all four quarters.

Likewise, the company is a free cash flow (FCF) machine. Its FCF increased in three straight years to a record $655.6 million in 2020.

Fiscal Year FCF (Millions) Growth
2017 $295.4 N/A
2018 $378.6 28.2%
2019 $507.2 34.0%
2020 $655.6 29.3%

(Source: MarketWatch, op. cit.)

The company’s strong FCF allows for financial flexibility and the ability to reduce its current debt of $2.0 billion.

Moreover, Vontier held a healthy cash balance of $670.3 million as of the end of June. (Source: Yahoo! Finance, op. cit.)

Analyst Take

Institutional ownership of Vontier stock is extremely broad, with 608 institutions holding a 94.1% stake in the company. (Source: Yahoo! Finance, op. cit.)

Insiders have also been active buyers of VNT stock, adding a net 626,751 shares during the last six months.

Trading at 12.9 times its consensus 2021 EPS estimate and two times its consensus 2021 revenue estimate, Vontier Corp looks like it has runway to rise and a cushion if there’s a market downturn.

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