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AMETEK Inc.’s (AME - Free Report) third-quarter 2016 earnings of 56 cents per share beat the Zacks Consensus Estimate of 55 cents. However, earnings declined 5.4% sequentially and 16.4% year over year.
On a year-over-year basis, revenues were negatively impacted by reduced demand stemming from weakness in oil and gas and metals markets. However, management stated that these markets have started to stabilize.
On the positive side, the company continues to see solid growth across its Ultra Precision Technologies business. This, in combination with a strong portfolio of differentiated businesses, is expected to help the company to post better results, going forward.
Management stated that AMETEK will continue to focus on investments and strategic acquisitions going forward.
AMETEK reported revenues of $945 million, down 3.3% sequentially and 5.4% year over year. Revenues came in below the Zacks Consensus Estimate of $957 million.
The company has two operating segments — Electronic Instruments Group (EIG) and Electromechanical Group (EMG) — which accounted for 61% and 39%, respectively of the total third quarter revenue.
Revenues by Segment
Revenues of EIG were down 2.8% sequentially and 3.2% on a year-over-year basis to $579.3 million. The sequential decrease was due to weakness in oil and gas business largely offsetting contribution from the acquisitions of ESP/SurgeX, Brookfield Engineering Laboratories, Nu Instruments and HS Foils.
EMG sales were down 4.2% sequentially and 8.6% on a year-over-year basis to $365.7 million. The decline was mainly due to deflation across packaging, Interconnects and Engineered Materials Business.
Operating Performance
AMETEK’s gross margin for the quarter was 35.2%, down 126 basis points (bps) from 36.4% in the preceding quarter and 156 bps from 36.7% a year ago.
The company reported operating income of $201.1 million, lower than the previous quarter’s income of $219 million and the year-ago quarter figure of $237.6 million.
Operating margin of 21.3% was down 112 bps sequentially and 252 bps year over year.
Net Income
AMETEK’s net income was $130.7 million, or 13.8% of net income margin, compared with $138.2 million, or 14.1%, in the previous quarter and $156.4 million, or 15.7%, in the year-ago period.
Adjusted earnings of 56 cents per share were lower than 59 cents in the prior quarter and 65 cents reported in the year-ago quarter.
Balance Sheet
Cash and cash equivalents balance at the end of the quarter was $445.5 million, down from $456.2 million in the previous quarter. Long-term debt was $1.54 billion, flat sequentially.
Outlook
For 2016, management expects revenues to be down in low single digits from 2015. Earnings are expected to be in the range of $2.29 to $2.31 per share. For 2016, the Zacks Consensus Estimate is pegged at $2.86 per share.
For the fourth quarter, management expects revenues to be down low single digits from the fourth quarter of 2015. Earnings are expected to be in the range of 57 cents to 59 cents per share. For the fourth quarter, the Zacks Consensus Estimate is pegged at 59 cents.
Zacks Rank and Stocks to Consider
Currently, AMETEK has a Zacks Rank #4 (Sell). Some better-ranked stocks in the wider technology sector include Electronics for Imaging, Inc. , Logitech International SA (LOGI - Free Report) and Stratasys Ltd. (SSYS - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
For the current year, the consensus estimate for Electronics for Imaging has gone up by 23.8% in the past 30 days. The same for Logitech and Stratasys has gone up by 4.4% and 27.8%, respectively.
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AMETEK (AME) Tops Q3 Earnings Estimates, Lags Revenues
AMETEK Inc.’s (AME - Free Report) third-quarter 2016 earnings of 56 cents per share beat the Zacks Consensus Estimate of 55 cents. However, earnings declined 5.4% sequentially and 16.4% year over year.
On a year-over-year basis, revenues were negatively impacted by reduced demand stemming from weakness in oil and gas and metals markets. However, management stated that these markets have started to stabilize.
On the positive side, the company continues to see solid growth across its Ultra Precision Technologies business. This, in combination with a strong portfolio of differentiated businesses, is expected to help the company to post better results, going forward.
Management stated that AMETEK will continue to focus on investments and strategic acquisitions going forward.
AMETEK INC Price, Consensus and EPS Surprise
AMETEK INC Price, Consensus and EPS Surprise | AMETEK INC Quote
The numbers in detail:-
Total Revenue
AMETEK reported revenues of $945 million, down 3.3% sequentially and 5.4% year over year. Revenues came in below the Zacks Consensus Estimate of $957 million.
The company has two operating segments — Electronic Instruments Group (EIG) and Electromechanical Group (EMG) — which accounted for 61% and 39%, respectively of the total third quarter revenue.
Revenues by Segment
Revenues of EIG were down 2.8% sequentially and 3.2% on a year-over-year basis to $579.3 million. The sequential decrease was due to weakness in oil and gas business largely offsetting contribution from the acquisitions of ESP/SurgeX, Brookfield Engineering Laboratories, Nu Instruments and HS Foils.
EMG sales were down 4.2% sequentially and 8.6% on a year-over-year basis to $365.7 million. The decline was mainly due to deflation across packaging, Interconnects and Engineered Materials Business.
Operating Performance
AMETEK’s gross margin for the quarter was 35.2%, down 126 basis points (bps) from 36.4% in the preceding quarter and 156 bps from 36.7% a year ago.
The company reported operating income of $201.1 million, lower than the previous quarter’s income of $219 million and the year-ago quarter figure of $237.6 million.
Operating margin of 21.3% was down 112 bps sequentially and 252 bps year over year.
Net Income
AMETEK’s net income was $130.7 million, or 13.8% of net income margin, compared with $138.2 million, or 14.1%, in the previous quarter and $156.4 million, or 15.7%, in the year-ago period.
Adjusted earnings of 56 cents per share were lower than 59 cents in the prior quarter and 65 cents reported in the year-ago quarter.
Balance Sheet
Cash and cash equivalents balance at the end of the quarter was $445.5 million, down from $456.2 million in the previous quarter. Long-term debt was $1.54 billion, flat sequentially.
Outlook
For 2016, management expects revenues to be down in low single digits from 2015. Earnings are expected to be in the range of $2.29 to $2.31 per share. For 2016, the Zacks Consensus Estimate is pegged at $2.86 per share.
For the fourth quarter, management expects revenues to be down low single digits from the fourth quarter of 2015. Earnings are expected to be in the range of 57 cents to 59 cents per share. For the fourth quarter, the Zacks Consensus Estimate is pegged at 59 cents.
Zacks Rank and Stocks to Consider
Currently, AMETEK has a Zacks Rank #4 (Sell). Some better-ranked stocks in the wider technology sector include Electronics for Imaging, Inc. , Logitech International SA (LOGI - Free Report) and Stratasys Ltd. (SSYS - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
For the current year, the consensus estimate for Electronics for Imaging has gone up by 23.8% in the past 30 days. The same for Logitech and Stratasys has gone up by 4.4% and 27.8%, respectively.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>