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Why Is AMTEK (AME) Up 4.2% Since the Last Earnings Report?
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It has been about a month since the last earnings report for AMTEK, Inc. (AME - Free Report) . Shares have added about 4.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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.
AMETEK Tops Q3 Earnings Estimates, Lags Revenues
AMETEK’s 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.
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 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.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four downward revisions for the current quarter.
At this time, AMTEK's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. However, 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 aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is AMTEK (AME) Up 4.2% Since the Last Earnings Report?
It has been about a month since the last earnings report for AMTEK, Inc. (AME - Free Report) . Shares have added about 4.2% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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.
AMETEK Tops Q3 Earnings Estimates, Lags Revenues
AMETEK’s 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.
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 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.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four downward revisions for the current quarter.
AMTEK, Inc. Price and Consensus
AMTEK, Inc. Price and Consensus | AMTEK, Inc. Quote
VGM Scores
At this time, AMTEK's stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with an 'F'. However, 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 aggregte VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.