Vontier Corporation

VNT Details

Vontier Corporation (NYSE: VNT) is a multinational industrial technology company that focuses on global transportation infrastructure. It offers a wide range of mobility technologies, diagnostics, and repair solutions to retail and commercial fueling operators, commercial vehicle repair businesses, and municipalities.

Latest News:

• Share Repurchase Program: On February 22, 2022, VNT stated that it has engaged in a USD 250 million accelerated share repurchase deal with Citibank, N.A. VNT would purchase the shares as part of its previously authorized USD 500 million share repurchase authorization announced in May 2021.
• Payment of Dividend: VNT's Board of Directors declared a regular quarterly cash dividend of USD 0.025 per share on February 14, 2022, payable on March 24, 2022, to shareholders of record on March 3, 2022.

Financial Highlights: Q4 FY21 (ended on December 31, 2021)

Source: Company Filings

• Revenue Performance: The Company's revenue in Q4 FY21 was USD 790.2 million, down from USD 815.0 million in Q4 FY20. However, revenue increased by 10% in financial year FY21 driven by an increase in core revenue of 7.4%.
• Higher Margins: In Q4 FY21, the Company maintained stronger gross margin of 45.1% and EBITDA margin of 24.9% against the prior quarter. Also, the company is having industry leading margin.
• Strong Cash Position: The Company's cash position was USD 572.6 million as of December 31, 2021, compared to USD 380.5 million as of December 31, 2020.

Key Risks:

• Global Operational Risk: VNT continues to expand its sales and reach outside the United States, particularly in high-growth areas. As a result, changes in the global economic and regulatory landscape in the firm's countries might harm its bottom line.
• Regulatory Risk: The Company's activities are heavily regulated; failing to comply with such requirements might harm the Company's financial statements and business, as well as its image.

Valuation Methodology: EV/SALES Multiple based Relative Valuation

(Source: Analysis by Kalkine Group)

Stock Recommendation:

While the management expect supply chain and COVID-related headwinds to extend into early 2022, they are encouraged by the underlying demand for their solutions, order growth, and backlog trends and confident in their ability to continue to successfully execute organically and inorganically to deliver compounding earnings and cash flow growth.

The stock has a 52-week high and low of USD 37.08 and 24.05. Considering the correction of 33.46% in the stock price in the past six months, revenue growth, increased margins, strong cash position, associated risks, and current valuation, we recommend a "BUY" rating on the stock at the closing price of USD 23.74, down by 4.77% as of February 23, 2022.

Year Technical Price Chart (as of February 23, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Summary Analysis

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.