Back to top

Analyst Blog

Ametek Inc. (AME - Snapshot Report) reported second-quarter 2013 earnings per share of 52 cents, in line with the Zacks Consensus Estimate.

Revenues

The company reported revenues of $878.8 million, down 0.5% sequentially but up 6.4% year over year. The year-over-year increase was due to strong demand in the Electronic as well as Electro mechanical segments.

During the quarter, orders grew 2.0% from the year-ago quarter to $895.0 million. The book-to-bill ratio was 1.02.

Revenues by Business Segments

Electronic Instruments Group (EIG) comprised 55% of Ametek’s sales in the quarter, up 6.9% from the year-ago quarter to $483.3 million. The second quarter was strong due to strength in Aerospace and oil and gas businesses, combined with the contribution from the Micro-Poise acquisition.

Ametek’s Electro Mechanical Group (EMG) segment generated 45% of its sales, up 5.8% from the year-ago quarter to $395.5 million. Management stated that the strong growth in Floorcare and Specialty Motors business and the Dunkermotoren acquisition led to the top-line increase.

Margins

Reported gross margin for the quarter was 35.4%, up 40 bps sequentially but down 20 basis points (bps) year over year. The sequential increase was due to a favorable mix.

Operating expenses (SG&A and Depreciation) of $108.6 million were down 0.5% from $109.1 million in the year-ago quarter. The reported operating margin was 23.1%, up 70 bps from the year-ago quarter margin of 22.4%. Selling, general and administrative (SG&A) expenses decreased as a percentage of sales, while depreciation expenses remained the same.

Reported net income was $128.3 million or earnings per share of 52 cents compared with $113.7 million or 47 cents in the comparable quarter last year. As there were no special items other than stock-based compensation expenses, adjusted net income was the same as GAAP net income in the quarter.

Balance Sheet

The company ended the second quarter with cash and short-term investments balance of $207.6 million, up from $177.3 million in the prior quarter. Trade receivables were $521.5 million, down from $529.2 million in the prior quarter.

Cash flow from operations was $128 million, up 11.0% year over year. Free cash flow was $117 million in the quarter.

Guidance

For the third quarter of 2013, Ametek expects total revenue to be up in mid-single digits over the year-ago quarter revenues. Earnings per share are expected to be in the range of 51 to 52 cents, up 9% to 11% year over year.

For 2013, management expects revenues to be up in mid single digits on a year- over-year basis. Earnings are expected to be at the low end of the previously guided range of $2.08 to $2.12 per share.

Conclusion

Ametek manufactures and sells electronic instruments and electromechanical devices. The company reported a decent second quarter with both earnings and revenues increasing year over year.

We remain encouraged by the improving order rates in the quarter. Also, the company gave modest third quarter guidance but lowered its earnings expectations for 2013, reflecting a weak economic environment.

We believe that Ametek’s new products, acquisitions and global market expansion will continue to drive growth. We also remain optimistic about its long-term prospects and contend that its restructuring activities will reduce operating expenses. The company stated that it expects $100 million of cost savings in 2013.

Currently, Ametek has a Zacks Rank #4 (Sell). Other stocks that are performing well at current levels include SanDisk (SNDK - Analyst Report) and Syntel Inc. (SYNT - Snapshot Report), carrying a Zacks Rank #1 (Strong Buy), and National Instruments (NATI - Snapshot Report), carrying a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%