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Ametek (AME) Down 0.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Ametek (AME - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ametek due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
AMETEK Beats Q1 Earnings Estimates
AMETEK has reported first-quarter 2021 adjusted earnings of $1.07 per share, which beat the Zacks Consensus Estimate by 4.9%.
Further, the bottom line rose 4.9% on a year-over-year basis but declined 0.9% sequentially.
Net sales of $1.22 billion surpassed the Zacks Consensus Estimate of $1.17 billion. Notably, the top line rose 1.4% from the previous quarter and1% year over year.
Top-line growth was driven by the strong performance of Electronic Instruments Group (“EIG”) in the reported quarter. Further, solid momentum across AMETEK Growth Model contributed well.
Also, the company’s operational efficiency has been a major positive in the reported quarter.
However, weakness in the Electromechanical Group (“EMG”) segment was concerning.
AMETEK’s proper execution of the four core growth strategies — operational excellence, global market expansion, investments in product development and acquisitions —are expected to continue to aid financial growth in the near and long terms. Moreover, the AMETEK Growth Model is likely to continue driving the company’s business performance.
Segments in Detail
EIG (65.1% of total sales): AMETEK generated sales of $790.9 million from the segment, reflecting growth of 2% from the year-ago quarter. This can primarily be attributed to improving market conditions. Also, strength across its Process business contributed well.
EMG (34.9% of sales):The segment generated $424.8 million of sales in the first quarter, which declined 1% on a year-over-year basis. The Reading Alloys divestiture impacted the top line negatively. Nevertheless, the segment delivered strong operational results. Also, it witnessed a rising demand for precision motion control solutions, which benefited the automation business.
Operating Details
For the first quarter, operating expenses were $922.4 million, down 4.9% year over year. Further, the figure contracted 490 basis points (bps) from the year-ago quarter as a percentage of net sales to 75.8%.
Consequently, operating margin was 24.1%, which expanded 110 bps from the year-ago reported figure.
Further, operating margin for EIG expanded 110 bps year over year to 26.2% and the same for EMG expanded 190 bps from the year-ago quarter to 24.7%.
Balance Sheet & Cash Flow
As of Mar 31, 2021, cash and cash equivalents were $1.1 billion, down from $1.2 billion as of Dec 31, 2020.
Further, inventories amounted to $604.3 million at the end of the first quarter compared with $559.2 million at the end of the prior quarter.
Long-term debt was $2.3 billion in the reported quarter, up from $2.2 billion in the prior quarter.
The company generated $284.4 million in cash from operation in the first quarter compared with $385.9 million in the previous quarter.
Further, AMETEK generated free cash flow of $266.9 million in the reported quarter.
Guidance
For second-quarter 2021, the company expects sales growth of alow 30% on a year-over-year basis.
AMETEK expects adjusted earnings of $1.08-$1.10 per share, suggesting year-over-year growth of 29-31%.
For 2021, the company expects sales year-over-year growth in the high teens on a percentage basis.
Adjusted earnings are anticipated to be $4.48-$4.56, suggesting an increase of 13-15% from that reported in 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Ametek has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ametek has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Ametek (AME) Down 0.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Ametek (AME - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ametek due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
AMETEK Beats Q1 Earnings Estimates
AMETEK has reported first-quarter 2021 adjusted earnings of $1.07 per share, which beat the Zacks Consensus Estimate by 4.9%.
Further, the bottom line rose 4.9% on a year-over-year basis but declined 0.9% sequentially.
Net sales of $1.22 billion surpassed the Zacks Consensus Estimate of $1.17 billion. Notably, the top line rose 1.4% from the previous quarter and1% year over year.
Top-line growth was driven by the strong performance of Electronic Instruments Group (“EIG”) in the reported quarter. Further, solid momentum across AMETEK Growth Model contributed well.
Also, the company’s operational efficiency has been a major positive in the reported quarter.
However, weakness in the Electromechanical Group (“EMG”) segment was concerning.
AMETEK’s proper execution of the four core growth strategies — operational excellence, global market expansion, investments in product development and acquisitions —are expected to continue to aid financial growth in the near and long terms. Moreover, the AMETEK Growth Model is likely to continue driving the company’s business performance.
Segments in Detail
EIG (65.1% of total sales): AMETEK generated sales of $790.9 million from the segment, reflecting growth of 2% from the year-ago quarter. This can primarily be attributed to improving market conditions. Also, strength across its Process business contributed well.
EMG (34.9% of sales):The segment generated $424.8 million of sales in the first quarter, which declined 1% on a year-over-year basis. The Reading Alloys divestiture impacted the top line negatively. Nevertheless, the segment delivered strong operational results. Also, it witnessed a rising demand for precision motion control solutions, which benefited the automation business.
Operating Details
For the first quarter, operating expenses were $922.4 million, down 4.9% year over year. Further, the figure contracted 490 basis points (bps) from the year-ago quarter as a percentage of net sales to 75.8%.
Consequently, operating margin was 24.1%, which expanded 110 bps from the year-ago reported figure.
Further, operating margin for EIG expanded 110 bps year over year to 26.2% and the same for EMG expanded 190 bps from the year-ago quarter to 24.7%.
Balance Sheet & Cash Flow
As of Mar 31, 2021, cash and cash equivalents were $1.1 billion, down from $1.2 billion as of Dec 31, 2020.
Further, inventories amounted to $604.3 million at the end of the first quarter compared with $559.2 million at the end of the prior quarter.
Long-term debt was $2.3 billion in the reported quarter, up from $2.2 billion in the prior quarter.
The company generated $284.4 million in cash from operation in the first quarter compared with $385.9 million in the previous quarter.
Further, AMETEK generated free cash flow of $266.9 million in the reported quarter.
Guidance
For second-quarter 2021, the company expects sales growth of alow 30% on a year-over-year basis.
AMETEK expects adjusted earnings of $1.08-$1.10 per share, suggesting year-over-year growth of 29-31%.
For 2021, the company expects sales year-over-year growth in the high teens on a percentage basis.
Adjusted earnings are anticipated to be $4.48-$4.56, suggesting an increase of 13-15% from that reported in 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Ametek has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ametek has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.