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AMETEK (AME) Q4 Earnings, Revenues Surpass Estimates

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AMETEK, Inc. (AME - Free Report) reported fourth-quarter 2018 adjusted earnings of 86 cents per share, which beat the Zacks Consensus Estimate by 2 cents and also exceeded management’s guidance of 82-84 cents. Further, the figure increased 23% from the year-ago quarter.

Net sales increased 11% on a year-over-year basis to $1.27 billion in the quarter. The figure topped the consensus estimate of $1.25 billion. Robust organic growth and strong segmental performance drove the top line.

For the full year of 2018, the company recorded revenues of $4.8 billion, 13% higher than prior year. Adjusted earnings per share were $3.29, up 26%.

AMETEK recorded organic sales growth of 5% for the reported quarter, and 7% in the full year. Improved operational activities and positive contributions from acquisitions aided the results.

AMETEK, Inc. Price, Consensus and EPS Surprise

AMETEK, Inc. Price, Consensus and EPS Surprise | AMETEK, Inc. Quote

 

Top Line Details

AMETEK reports sales in two organized segments — Electronic Instruments Group (“EIG”) and Electromechanical Group (“EMG”).

EIG (65% of total sales): The company generated sales of $826 million from this segment, which reflected growth of 11% from the year-ago quarter. Further, organic sales for the quarter were also solid.

For the full year, the EIG recorded $3 billion in sales, up 11% year over year.

EMG (35% of sales): The segment generated $445.3 million in the fourth quarter, which increased 11% on year-over-year basis. The upside can primarily be attributed to solid organic sales growth and positive contributions from the FMH Aerospace buyout.

Operating Details

For the fourth quarter, operating margin was 22.2%, expanding 50 basis points (bps) from the prior-year quarter but contracting 10 bps on a sequential basis.

The rise can primarily be attributed to the solid performance in EMG segment, which recorded operating margin expansion of 110 bps year over year. However, the operating margin declined slightly for the EIG segment at 26%, contracting 20 bps. Further, operational efficiency in the reported quarter was a major positive.

Selling, general and administrative expenses were 12.1%, as percentage of sales, contracting 70 bps from the year-ago quarter.

Balance Sheet

As of Dec 31, 2018, cash and cash equivalents were $354 million, down from $518.7 million as of Sep 30, 2018.

Long-term debt was $2.27 billion, up from $1.83 billion in the previous quarter.

Guidance

For first-quarter 2019, AMETEK expects sales to reflect growth of high single digits on a year-over-year basis.

Earnings are anticipated to lie in the range of 95-97 cents per share, reflecting year-over-year growth of 9-11%.

For 2019, the company anticipates total sales to grow by high-single digits and organic sales by 3-5%. The total sales growth will reflect positive contributions from the acquisitions undertaken recently.

Further, AMETEK provided guidance for adjusted earnings per share for 2019 of $3.95-$4.05, reflecting growth of 8-11% from 2018.

Zacks Rank and Stocks to Consider

AMETEK currently carries a Zacks Rank #3 (Hold).

Some stocks worth considering in the broader Computer and Technology sector are salesforce.com, inc. (CRM - Free Report) , Twitter, Inc. , and Xilinx, Inc. , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Salesforce, Twitter and Xilinx is projected to be 24.17%, 22.05% and 9.5%, respectively.

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