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IDEX's Diversified Businesses & Buyouts to Aid Amid Pandemic
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We have issued an updated research report on IDEX Corporation (IEX - Free Report) on Sep 16.
The Lake Forest, IL-based company specializes in a diverse range of applications, including health and science technologies; fluid and metering technologies; and fire, safety and other products.
The company belongs to the Zacks Manufacturing – General Industrial industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector. There are a number of factors that are influencing IDEX’s prospects. A brief discussion on important factors is discussed below:
Multiple Tailwinds: IDEX seems to be equipped to effectively deal with the coronavirus outbreak-led challenges. It has a solid customer base in various end markets — including fire and rescue, life science, water & wastewater, food, general industrial, chemical, agricultural, and energy. In addition, the company’s solid product offerings (including flow meters, displacement pumps, corrective tubing, fire fighting pumps, and others), growth investments and cost-control measures are its boons.
Rewards to Shareholders: The company is committed toward rewarding shareholders handsomely through dividend payments and share buybacks. Notably, it distributed dividends totaling $76.5 million in the second half of 2020, reflecting an increase of 7.3% from the year-ago period. Also, during the same timeframe, it bought back shares worth $110.3 million, up from $54.7 million in the first half of 2019.
It is worth mentioning here that the company announced a hike of 16% in its quarterly dividend rate in May 2019. We believe that a healthy cash flow position will help it in rewarding shareholders, going forward.
Buyouts: The company believes in enhancing product lines, expanding market share and boosting growth opportunities through acquisitions. It is worth mentioning here that acquisitions boosted IDEX’s sales growth by 5% in second-quarter 2020.
In February 2020, IDEX acquired Flow Management Devices. The acquisition enhanced IDEX’s ability to offer better solutions to refineries, chemical manufacturers and pipeline operators. In July 2019, the company acquired Velcora Holding AB.
Pandemic Woes: In second-quarter 2020, IDEX’s revenues declined 12.6% year over year, with organic sales down by 17%. Orders decreased 18% due to weak business in dispensing, energy and general industrial markets.
The company is wary about the impact of the pandemic on its operations and so, refrained from reissuing its financial projections for 2020. For the third quarter, it expects a year-over-year organic sales decline of 12-17%. It thus anticipates an adverse impact of the same on earnings.
Leverage and Liquidity: High debts and weak abilities to pay related financial obligations can be concerning for IDEX. At the end of second-quarter 2020, the company’s long-term debts were $1,044.4 million. Its total debt/total capital increased from 30.9% in the first-quarter end to 31.6% at the end of the second quarter.
In addition, its cash and cash equivalents were $746.3 million at the end of the second quarter. Also, its interest coverage ratio (TTM) decreased from 12.8X at the end of the first quarter to 11.3X at the end of the second quarter. Further, its return on total capital was 12.8% at the second-quarter end, lower than 14.2% at the first-quarter end.
Forex Woes and Peers: IDEX has a strong global presence, with operations spread across Europe, Asia, North America, South America and Australia. International diversification has exposed the company to macroeconomic challenges, unfavorable movements in foreign currencies, local competitive pressure and geopolitical issues. In second-quarter 2020, forex woes adversely impacted the company’s sales by 1% year over year.
The company faces competitive pressures from some players in the industry, including Colfax Corporation , Xylem Inc. (XYL - Free Report) and Dover Corporation (DOV - Free Report) .
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IDEX's Diversified Businesses & Buyouts to Aid Amid Pandemic
We have issued an updated research report on IDEX Corporation (IEX - Free Report) on Sep 16.
The Lake Forest, IL-based company specializes in a diverse range of applications, including health and science technologies; fluid and metering technologies; and fire, safety and other products.
The company belongs to the Zacks Manufacturing – General Industrial industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector. There are a number of factors that are influencing IDEX’s prospects. A brief discussion on important factors is discussed below:
Multiple Tailwinds: IDEX seems to be equipped to effectively deal with the coronavirus outbreak-led challenges. It has a solid customer base in various end markets — including fire and rescue, life science, water & wastewater, food, general industrial, chemical, agricultural, and energy. In addition, the company’s solid product offerings (including flow meters, displacement pumps, corrective tubing, fire fighting pumps, and others), growth investments and cost-control measures are its boons.
Rewards to Shareholders: The company is committed toward rewarding shareholders handsomely through dividend payments and share buybacks. Notably, it distributed dividends totaling $76.5 million in the second half of 2020, reflecting an increase of 7.3% from the year-ago period. Also, during the same timeframe, it bought back shares worth $110.3 million, up from $54.7 million in the first half of 2019.
It is worth mentioning here that the company announced a hike of 16% in its quarterly dividend rate in May 2019. We believe that a healthy cash flow position will help it in rewarding shareholders, going forward.
Buyouts: The company believes in enhancing product lines, expanding market share and boosting growth opportunities through acquisitions. It is worth mentioning here that acquisitions boosted IDEX’s sales growth by 5% in second-quarter 2020.
In February 2020, IDEX acquired Flow Management Devices. The acquisition enhanced IDEX’s ability to offer better solutions to refineries, chemical manufacturers and pipeline operators. In July 2019, the company acquired Velcora Holding AB.
Pandemic Woes: In second-quarter 2020, IDEX’s revenues declined 12.6% year over year, with organic sales down by 17%. Orders decreased 18% due to weak business in dispensing, energy and general industrial markets.
The company is wary about the impact of the pandemic on its operations and so, refrained from reissuing its financial projections for 2020. For the third quarter, it expects a year-over-year organic sales decline of 12-17%. It thus anticipates an adverse impact of the same on earnings.
Leverage and Liquidity: High debts and weak abilities to pay related financial obligations can be concerning for IDEX. At the end of second-quarter 2020, the company’s long-term debts were $1,044.4 million. Its total debt/total capital increased from 30.9% in the first-quarter end to 31.6% at the end of the second quarter.
In addition, its cash and cash equivalents were $746.3 million at the end of the second quarter. Also, its interest coverage ratio (TTM) decreased from 12.8X at the end of the first quarter to 11.3X at the end of the second quarter. Further, its return on total capital was 12.8% at the second-quarter end, lower than 14.2% at the first-quarter end.
Forex Woes and Peers: IDEX has a strong global presence, with operations spread across Europe, Asia, North America, South America and Australia. International diversification has exposed the company to macroeconomic challenges, unfavorable movements in foreign currencies, local competitive pressure and geopolitical issues. In second-quarter 2020, forex woes adversely impacted the company’s sales by 1% year over year.
The company faces competitive pressures from some players in the industry, including Colfax Corporation , Xylem Inc. (XYL - Free Report) and Dover Corporation (DOV - Free Report) .
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>