Vontier Corporation

VNT Details

Vontier Corporation (NYSE: VNT) is a global industrial technology company that specializes in transportation infrastructure worldwide. It offers a wide range of mobility technologies, diagnostics, and repair solutions to retail and commercial fueling operators, commercial vehicle repair businesses, and municipalities, including advanced environmental sensors, fueling equipment, field payment hardware, remote management, vehicle tracking and fleet management software-as-a-service solutions, and other allied products and services.

Latest News:

• Share Repurchase: On February 22, 2022, VNT announced that it had entered into a USD 250 million accelerated share repurchase agreement with Citibank, N.A. The shares will be acquired as part of Vontier's previously approved USD 500 million share repurchase authorization announced in May 2021.
• Quarterly Dividend: On February 14, 2022, VNT declared a regular quarterly cash dividend of USD 0.025 per share payable on March 24, 2022, to stockholders of record on March 3, 2022.

FY21 Results:

• Growth in Topline: VNT reported YoY growth of 10.58% in total revenue to USD 2.99 billion in FY21 (ended December 31, 2021) from USD 2.70 billion in FY20, driven by growth in both segments.
• Improvement in Profitability: Net income for FY21 was USD 413.0 million vs. USD 342.0 million in FY20.
• Strong Balance Sheet: As of December 31, 2021, the company had cash & cash equivalents of USD 572.60 million and total debt of USD 2.59 billion.

Key Risk:

• Global Operational Risk: In FY21, sales outside the United States accounted for 30% of total sales. VNT continues to expand its sales and footprint outside of the United States, particularly in high-growth markets. As a result, changes in the global economic and regulatory landscape in the company's countries could harm its bottom line.

Outlook:

• Diluted EPS Guidance: As of FY21, VNP expects diluted EPS of USD 0.55 – 0.58 and USD 2.67 – 2.77 for Q1FY22 and FY22, respectively.
• Adjusted Diluted EPS Guidance : VNP anticipates adjusted diluted EPS of USD 0.64 – 0.67 and USD 3.05 – 3.15 for Q1FY22 and FY22, respectively.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

  (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

VNT's stock price has fallen 25.72% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 21.95 to USD 37.08. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 31.05.

Considering the significant correction in the stock price, reduction in leverage, solid margins, positive outlook, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 24.49, up 0.53% as of March 22, 2022.

Three-Year Technical Price Chart (March 22, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

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.