It has been about a month since the last earnings report for Idex (IEX Quick QuoteIEX - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Idex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

IDEX Lags on Q4 Earnings, Projects Y/Y Growth for 2022

IDEX reported mixed fourth-quarter 2021 results. The company’s earnings lagged the Zacks Consensus Estimate by 2.52%, whereas sales surpassed the same by 1.27%.

In the reported quarter, the company’s adjusted earnings were $1.55 per share, lagging the Zacks Consensus Estimate of $1.59. On a year-over-year basis, the bottom line increased 13.1% from the year-ago quarter’s figure of $1.37. Healthy segmental results favorably impacted the quarter’s earnings.

In 2021, the company’s adjusted earnings were $6.30 per share, increasing from the previous year’s $5.19. However, the bottom line lagged the Zacks Consensus estimate of $6.34.

Earnings for the fourth quarter and 2021 were at the low-end of the company’s projections of $1.55-$1.58 and $6.30-$6.33, respectively.

Revenue Details

In the quarter under review, the company’s net sales were $714.8 million, reflecting year-over-year growth of 16.3%. Organic sales in the quarter increased 11% year over year, higher than 9-10% growth expected by the company. Acquired assets boosted sales by 5%.

The company’s top line surpassed the Zacks Consensus Estimate of $705.9 million.

It reports net sales under three business segments, results of which are discussed below:

Revenues from Fluid & Metering Technologies totaled $252.8 million, increasing 10.1% year over year. Organic sales were up 7% and synergies from acquired assets added 4%. Foreign-currency translation left a negative impact of 1%.

Revenues from Health & Science Technologies totaled $294.1 million, reflecting year-over-year growth of 24.7%. Organic sales in the quarter increased 16% year over year, while acquisitions/divestitures boosted sales by 9%.

Revenues from Fire & Safety/Diversified Products totaled $168.5 million, rising 11.9% year over year. The results were positively impacted by a 13% increase in organic sales and suffered 1% from forex woes.

In 2021, the company’s revenues totaled $2.76 billion, reflecting an increase of 17.6% from the previous year. However, the top line was in line with the Zacks Consensus Estimate of $2.75 billion.

Margin Profile

In the quarter under review, IDEX’s cost of sales increased 15.9% year over year to $400.6 million. The adjusted gross profit was $314.2 million, up 16.8% year over year, while the adjusted gross margin increased 20 basis points (bps) to 44%.

Selling, general and administrative expenses increased 21.1% year over year to $151.5 million. It represented 21.2% of revenues. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter under review increased 15.1% year over year to $192.4 million. Also, the adjusted EBITDA margin decreased 30 bps year over year to 26.9%.

The adjusted operating income was $162.7 million, up 13% year over year, whereas the margin was 22.8%, down 60 bps. Interest expenses in the quarter dipped 11.9% year over year to $9.6 million.

Balance Sheet and Cash Flow

Exiting the fourth quarter, IDEX’s cash and cash equivalents increased 6.1% sequentially to $855.4 million. Long-term debt was $1,190.3 million, flat from the previous quarter.

In 2021, the company raised $499.4 million from 3.00% senior notes issued and made payments of $350.1 million for 4.20% senior notes.

In 2021, IDEX generated net cash of $565.3 million from operating activities, decreasing 0.7% from the previous year. Capital used for purchasing property, plant and equipment was $72.7 million versus $51.6 million in 2020. Free cash flow was $492.6 million, down 4.8% year over year.

The company paid out dividends totaling $161.1 million and refrained from repurchasing any shares. Notably, it distributed $151.8 million as dividends and bought back shares worth $110.3 million in 2020.

Amount spent on acquisitions, net of acquired cash, totaled $577.4 million. In the fourth quarter, IDEX entered a deal to buy Nexsight, LLC, and its WinCan, Envirosight, MyTana and Pipeline Renewal Technologies businesses. The deal is valued at $120 million in cash. The acquisition is expected to be complete in first-quarter 2022.

Outlook

IDEX anticipates the demand for technologies to be strong for the Health & Science Technologies segment. The pandemic-related woes and supply-chain issues are predicted to persist in the first half of 2022.

For first-quarter 2022, IDEX anticipates adjusted earnings of $1.73-$1.76 per share and year-over-year growth in organic sales of 6-7%.

For 2022, the company anticipates adjusted earnings of $7.33-$7.63 per share. Organic sales are predicted to grow 5-8%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, Idex has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise Idex has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.