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IDEX (IEX) Gains From End-Market Strength Amid Cost Woes

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IDEX Corporation (IEX - Free Report) provides products and services related to health and science technologies, fluid and metering technologies, and fire and safety. Its solid fundamentals and growth opportunities raise its attractiveness. Yet, cost and supply-chain woes are concerning.

The Lake Forest, IL-based company presently carries a Zacks Rank #3 (Hold). The stock belongs to the Zacks Manufacturing – General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is in the bottom 32% (with a rank of 170) of more than 250 Zacks industries.

In the past year, the company’s shares have gained 9.8% compared with the industry’s growth of 3.9%. Also, the S&P 500 and the sector have gained 21.6% and 5.9%, respectively, in the same period.


Zacks Investment ResearchImage Source: Zacks Investment Research


Factors Influencing IDEX

IDEX is poised to benefit from its solid product offerings, innovation capabilities and focus on expanding in emerging markets. Its product lineup includes displacement pumps, flow meters, injectors, degassing equipment, corrective tubing, fire fighting pumps, and rescue tools. Also, the company’s productivity enhancement initiatives and digitization are beneficial for it in the quarters ahead.

Exposure in multiple end markets, including food, life sciences, energy, water & wastewater, general industrial, fire and rescue, chemical, and agriculture, helps lower risks arising from excessive reliance on a single or few markets. The company anticipates strength in food and pharma, agriculture, life sciences, industrial, dispensing, general industrial, water, semiconductor, and analytical instrumentation to benefit its 2021 segmental performance (results not yet released).

IDEX’s acquisitive nature adds to its attractiveness. The company added Abel Pumps L.P. to its portfolio in March 2021, and Airtech Group as well as US Valve Corporation and other entities in June. Last November, it agreed to purchase Nexsight, LLC and its WinCan, Envirosight, MyTana and Pipeline Renewal Technologies businesses for $120 million. Shareholder-friendly policies of rewarding handsomely through dividend payments and share buybacks benefit the company.

IDEX anticipates organic sales growth of 11-12% for 2021 and 9-10% for the fourth quarter. It expects earnings per share of $6.30-$6.33 for 2021 and $1.55-$1.58 for the fourth quarter.

On the flip side, IDEX suffered from high costs and operating expenses in the last reported quarter. While its cost of sales increased 21.5% year over year; selling, general and administrative expenses grew 25.4%. The company might continue to face headwinds from cost inflation, supply-chain restrictions and logistics issues in the quarters ahead. Pricing might come in as a relief.

IDEX is also exposed to risks from international operations. Softness in the fire-rescue automotive, chemical and energy markets might be concerning.

The Zacks Consensus Estimate for IDEX’s earnings per share is pegged at $7.10 for 2022, suggesting no change from the 60-day-ago figure. The consensus estimate is pegged at $1.59 for fourth-quarter 2021 and $6.34 for 2021. The company is slated to release the fourth-quarter results on Feb 1, 2022, after market close.

IDEX Corporation Price and Consensus


IDEX Corporation Price and Consensus

IDEX Corporation price-consensus-chart | IDEX Corporation Quote

Stocks to Consider

Three better-ranked stocks from the industry are mentioned below.

Ferguson plc’s (FERG - Free Report) results in the last reported quarter were impressive, with an earnings beat of 16.82%. The company presently sports a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ferguson’s earnings has increased 10.5% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have gained 11.3% in the past three months.

Alta Equipment Group Inc. (ALTG - Free Report) reported weaker-than-expected results in the last reported quarter, with earnings lagging estimates by 50.00%. Its earnings surprise in the last four quarters was -38.62%, on average. The company presently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for Alta Equipment’s earnings has increased 5.3% for 2022 in the past 60 days. ALTG’s shares have rallied 4.8% in the past three months.

Graco Inc. (GGG - Free Report) presently carries a Zacks Rank #2. The company’s earnings surprise in the last reported quarter was -10.94%. The same forthe last four quarters was 6.58%, on average.

In the past 60 days, the Zacks Consensus Estimate for Graco’s earnings hasincreased 1.9% for 2022. GGG’s shares have rallied 0.8% in the past three months.

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