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IDEX (IEX) Beats Q3 Earnings on Organic Growth, Raises View
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Industrial goods manufacturer IDEX Corporation (IEX - Free Report) reported strong third-quarter 2017 results, driven by healthy year-over-year increase in earnings and revenues. GAAP earnings for the quarter were $83.8 million or $1.08 per share compared with $69.9 million or 91 cents per share in the year-ago quarter. The year-over-year improvement was primarily attributable to top-line growth.
Excluding non-recurring items, adjusted net income for the reported quarter was $83.8 million or $1.08 per share compared with $70.5 million or 92 cents per share in the year-earlier quarter. Adjusted earnings exceeded the Zacks Consensus Estimate by a couple of cents.
IDEX Corporation Price, Consensus and EPS Surprise
Net sales increased to $574.5 million from $530.4 million in the year-earlier quarter with healthy demand patterns and diligent execution of operational plans. Revenues exceeded the Zacks Consensus Estimate of $562 million.
IDEX reported organic growth of 7% in the reported quarter while orders were up 8% year over year to $573.8 million.
By segments, Fluid and Metering Technologies (FMT) recorded a 6% year-over-year increase in revenues to $221 million driven by organic growth of 7%. Health and Science Technologies (HST) revenues were $207.1 million, up 13% year over year owing to 10% organic growth and 3% inorganic growth. Fire and Safety/Diversified Products (FSD) recorded sales of $146.6 million, up 6% year over year led by organic growth of 4%.
Margins
Gross margin was 44.9%, up 140 basis points (bps) from the prior-year quarter owing to productivity and volume leverage. Operating income in the quarter was $126.5 million compared with $109.7 million in the year-ago quarter with respective margins of 22% and 20.7%. Adjusted operating income for the reported quarter was $126.5 million compared with $111.8 million in the year-earlier quarter for respective margins of 22% and 21.1%, primarily due to operational efficiency and fair value inventory step-up charges in the prior year. Earnings before interest, taxes depreciation and amortization or EBITDA were $146.1 million compared with $133.4 million in the year-ago quarter. Adjusted EBITDA improved to $146.1 million from $135.5 million in the prior-year quarter.
The FMT segment recorded an operating margin of 28.1% in the quarter, up 130 bps year over year due to higher volume and cost savings from restructuring efforts.
The HST segment’s operating margin came in at 22.2%, up 190 bps from the prior-year quarter. This was largely attributable to higher volume and a fair value inventory step-up charge in the prior-year period.
The FSD segment’s adjusted operating margin was 24.7%, up 130 bps from the year-ago quarter owing to higher volume and a fair value inventory step-up charge in the prior-year period.
Balance Sheet & Cash Flow
As of Sep 30, 2017, IDEX had cash and cash equivalents of $303.3 million with long-term debt of $874.9 million. Cash flow from operating activities was $296.6 million in the first nine months of 2017 compared with $284.3 million in the prior-year period. Free cash flow at quarter end totaled $115.5 million compared with $113.9 million in the year-ago period, bringing the respective tallies for the first nine months of the year to $268.5 million and $255.7 million. The company repurchased 116,000 shares during the quarter for $13.8 million.
Guidance Raised
With solid quarterly results and robust demand patterns, IDEX raised its earlier guidance for 2017. The company currently expects adjusted earnings of $4.25-$4.27 per share, up from $4.00-$4.17 expected earlier. The company reaffirmed its organic growth expectations for 2017 at 5%. Fourth-quarter 2017 adjusted earnings are expected in the range of $1.06-$1.08 per share on organic growth of 6%.
Altra Industrial has long-term earnings growth expectations of 8%. It has a positive earnings surprise history with an average of 17% in the trailing four quarters, comprehensively beating estimates in each.
Dover Corporation has long-term earnings growth expectations of 11.3%.
Illinois Tool has long-term earnings growth expectations of 9%.
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IDEX (IEX) Beats Q3 Earnings on Organic Growth, Raises View
Industrial goods manufacturer IDEX Corporation (IEX - Free Report) reported strong third-quarter 2017 results, driven by healthy year-over-year increase in earnings and revenues. GAAP earnings for the quarter were $83.8 million or $1.08 per share compared with $69.9 million or 91 cents per share in the year-ago quarter. The year-over-year improvement was primarily attributable to top-line growth.
Excluding non-recurring items, adjusted net income for the reported quarter was $83.8 million or $1.08 per share compared with $70.5 million or 92 cents per share in the year-earlier quarter. Adjusted earnings exceeded the Zacks Consensus Estimate by a couple of cents.
IDEX Corporation Price, Consensus and EPS Surprise
IDEX Corporation Price, Consensus and EPS Surprise | IDEX Corporation Quote
Revenues
Net sales increased to $574.5 million from $530.4 million in the year-earlier quarter with healthy demand patterns and diligent execution of operational plans. Revenues exceeded the Zacks Consensus Estimate of $562 million.
IDEX reported organic growth of 7% in the reported quarter while orders were up 8% year over year to $573.8 million.
By segments, Fluid and Metering Technologies (FMT) recorded a 6% year-over-year increase in revenues to $221 million driven by organic growth of 7%. Health and Science Technologies (HST) revenues were $207.1 million, up 13% year over year owing to 10% organic growth and 3% inorganic growth. Fire and Safety/Diversified Products (FSD) recorded sales of $146.6 million, up 6% year over year led by organic growth of 4%.
Margins
Gross margin was 44.9%, up 140 basis points (bps) from the prior-year quarter owing to productivity and volume leverage. Operating income in the quarter was $126.5 million compared with $109.7 million in the year-ago quarter with respective margins of 22% and 20.7%. Adjusted operating income for the reported quarter was $126.5 million compared with $111.8 million in the year-earlier quarter for respective margins of 22% and 21.1%, primarily due to operational efficiency and fair value inventory step-up charges in the prior year. Earnings before interest, taxes depreciation and amortization or EBITDA were $146.1 million compared with $133.4 million in the year-ago quarter. Adjusted EBITDA improved to $146.1 million from $135.5 million in the prior-year quarter.
The FMT segment recorded an operating margin of 28.1% in the quarter, up 130 bps year over year due to higher volume and cost savings from restructuring efforts.
The HST segment’s operating margin came in at 22.2%, up 190 bps from the prior-year quarter. This was largely attributable to higher volume and a fair value inventory step-up charge in the prior-year period.
The FSD segment’s adjusted operating margin was 24.7%, up 130 bps from the year-ago quarter owing to higher volume and a fair value inventory step-up charge in the prior-year period.
Balance Sheet & Cash Flow
As of Sep 30, 2017, IDEX had cash and cash equivalents of $303.3 million with long-term debt of $874.9 million. Cash flow from operating activities was $296.6 million in the first nine months of 2017 compared with $284.3 million in the prior-year period. Free cash flow at quarter end totaled $115.5 million compared with $113.9 million in the year-ago period, bringing the respective tallies for the first nine months of the year to $268.5 million and $255.7 million. The company repurchased 116,000 shares during the quarter for $13.8 million.
Guidance Raised
With solid quarterly results and robust demand patterns, IDEX raised its earlier guidance for 2017. The company currently expects adjusted earnings of $4.25-$4.27 per share, up from $4.00-$4.17 expected earlier. The company reaffirmed its organic growth expectations for 2017 at 5%. Fourth-quarter 2017 adjusted earnings are expected in the range of $1.06-$1.08 per share on organic growth of 6%.
IDEX currently carries a Zacks Rank #2 (Buy). Other stocks in the industry worth considering include Altra Industrial Motion Corp. , Dover Corporation (DOV - Free Report) and Illinois Tool Works Inc. (ITW - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Altra Industrial has long-term earnings growth expectations of 8%. It has a positive earnings surprise history with an average of 17% in the trailing four quarters, comprehensively beating estimates in each.
Dover Corporation has long-term earnings growth expectations of 11.3%.
Illinois Tool has long-term earnings growth expectations of 9%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>