$28.49
$56.59
bear $28.49
base $40.63
bull $56.59
margin of safety $24.00
market price* $66.55
Ralliant is the precision-technology business spun out of Fortive in mid-2025. It has two parts. Test & Measurement sells Tektronix oscilloscopes and related instruments plus EA Elektro-Automatik high-power test equipment for batteries, electric vehicles, hydrogen and renewable energy. Sensors & Safety Systems sells QUALITROL utility-grid monitoring, Gems and Setra sensors, Hengstler-Dynapar encoders, Anderson-Negele and other industrial brands. Annual revenue has been about $2.07-2.16 billion. Roughly half is booked in the United States and about 15% in China. Earnings level. Owner earnings are operating cash flow with working-capital timing swings removed, minus stock-based pay and the capital spending needed to keep the business running. They were about $403 million in 2023, $373 million in 2024 and $233 million in 2025, or $3.58, $3.31 and $2.06 per share. These figures reconcile exactly to net income plus non-cash charges. The 2023 and 2024 figures were carved out of Fortive. They carry no interest and leave out the cost of running a standalone public company, which management puts at roughly 170 basis points of margin (about $35 million a year). 2025 was a weak year: Test & Measurement organic revenue fell 15% on lower oscilloscope and high-power demand, and stock pay included a one-time spin-related award modification. The $1.44 billion goodwill write-down on EA in 2025 was a non-cash recognition that the 2024 purchase was overpaid as EV adoption forecasts fell. It is added back here, but it is evidence of capital destroyed. Adding the $32 million of cash interest paid back to 2025, and taking the 2023-2024 figures less standalone costs, puts the cash the business generates for all capital providers at about $265-370 million. We anchor the base on $320 million. That is the median of this short history, which does not yet include a full standalone cycle. 2026 first-half revenue was up 12% and operating profit was $150 million against $133 million a year earlier. First-half operating cash flow ($125 million) trailed the prior year ($157 million), partly because inventories absorbed $36 million and the company now pays interest. One strong half does not move the anchor. Growth credited. Owner earnings fell about 37% in 2025, so year one of the base is set at the anchor level, not at a growth rate. The only growth credited is pricing. Both segments have raised prices 2-4% a year (2.1% in Test & Measurement and 4.1% in Sensors in 2025), which is a demonstrated, repeatable mechanism. No credit is given for an EV or energy-transition recovery at EA, for new products, or for margin expansion. Debt. At July 3, 2026 Ralliant owed $1.15 billion of floating-rate unsecured term loans, priced at SOFR plus 0.875-1.625%. The $530 million 18-month tranche was repaid or refinanced in the first half of 2026, and the remaining debt now matures beyond one year. Against that it held $271 million of cash. Keeping about $100 million to run the business, net debt is about $978 million. The covenant is a maximum of 3.5x net debt to earnings before interest, taxes, depreciation and amortization. Today the company is near 2x, with annual interest of about $60-65 million against roughly $300 million or more of pre-interest cash flow. The interest cost is close to our yardstick rate, so no adjustment is made for the cost of the debt. Base case (about $40.60 per share). The business generates about $320 million in 2026 and $330 million in 2027, then holds near $335 million with price increases offsetting cost inflation. Sensors & Safety Systems (utility grid monitoring, industrial sensors) is steady. Test & Measurement stays below its 2024 level and EA does not recover. Business value is about $5.57 billion, less $0.98 billion of net debt, leaving $4.59 billion, or $40.63 per share. Bear case (about $28.50 per share). This case uses a downturn of the depth test-and-measurement makers actually suffered in 2009, when instrument orders fell 25-30%, plus the 2025 Test & Measurement decline already in the filings. Owner cash flow drops from $300 million to about $205-215 million for two years, recovers to about $270 million, then fades toward $250 million as EA's intangibles keep wasting and acquisition write-offs recur. Even at the trough, cash flow covers interest about three times. The covenant would be tight but would hold. Business value is about $4.19 billion, less $0.98 billion of debt, leaving $3.22 billion, or $28.49 per share. Bull case (about $56.60 per share). Stand-alone cost savings ($9-11 million announced, due by end of 2026) and the 2026 order momentum hold. Cash flow reaches about $360 million, close to 2023-2024 carve-out levels after standalone costs, and grows 3% a year through pricing. Business value is about $7.37 billion, less $0.98 billion, leaving $6.39 billion, or $56.59 per share. Challenge to the case. We tested whether 2025 was a trough or a new level. The filing shows the Sensors segment grew organically 4.6% in 2025 with a 26.9% margin. The 2025 decline was concentrated in Test & Measurement oscilloscopes and EA. The 2026 first-half recovery is consistent with a cyclical trough rather than a permanent reset. That supports a base above 2025 but below the carve-out years. Margin-of-safety price. We are only moderately sure of the earnings level. There are just three years of history, two of them carved out of a larger parent, and the first standalone year was disrupted. The worst plausible outcome is a deep industrial and electronics downturn combined with continued EA weakness and another poorly priced acquisition funded with debt. The heritage of acquisitive growth makes that last risk real. The balance sheet would survive such a downturn: debt is modest at about 2x, no maturity is near term, and the businesses are asset-light. The things we are most likely to be wrong about are, first, whether the 2025 trough is really behind it and, second, whether management overpays again. If both go wrong, the shares look worth the high $20s. The company pays only a token dividend of about $0.20 a year, so nearly all of the return must come from the price rising toward value. The margin-of-safety price is about $24 and assumes a three-to-five-year holding period; from that price the base case implies roughly 20% a year. It also leaves the shares roughly at bear-case value if a downturn arrives first.