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Robust Order Level & Buyouts Aid IDEX (IEX) Despite Cost Woes
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IDEX Corporation (IEX - Free Report) is gaining from its solid product portfolio, execution abilities and growth investments (including increased exposure in emerging markets, productivity enhancement and digitization). Also, robust order and backlog levels along with effective pricing actions are expected to be beneficial in the quarters ahead.
Steady demand in the industrial end market with strength in energy, mining and infrastructure markets, and robust municipal water businesses are benefiting its Fluid & Metering Technologies segment. Solid business in semiconductor, analytical instrumentation, material processing and life sciences markets is supporting the Health & Science Technologies segment.
For the Fire, Safety & Diversified product segment, solid momentum in dispensing business, supported by the delivery of North American project volume and continued strength in the global architectural paint market bode well.
IDEX has been strengthening and expanding its businesses through asset additions for a while. The acquisition of Muon Group in November 2022, expanded IDEX’s growing platform of precision technology business within the Health & Science Technologies segment. Also, the commercial synergy potential from the combined entities will likely boost offerings for new and existing customers.
The company’s buyout of KZValve (May 2022) solidified fluid-management solutions in its Banjo Corporation business. The Nexsight, LLC acquisition and its WinCan, Envirosight, MyTana and Pipeline Renewal Technologies businesses (March 2022) drove IEX’s position in the intelligent water technologies market. Also, its purchase of Airtech Group, US Valve Corporation and other entities aided IEX’s Health & Science Technology segment.
IDEX remains committed to maximizing its shareholder returns. The company paid out dividends worth $132.2 million and repurchased shares worth $146.3 million during the first nine months of 2022. Its board also announced an 11% hike in its quarterly dividend rate in May 2022.
However, IEX is experiencing weakness due to supply-related issues in the fire OEM market which in turn is affecting its Fire, Safety & Diversified Products segment. The company is also facing challenges related to cost woes and higher discretionary expenses.
In the third quarter, IDEX’s cost of sales increased 10.5% and selling, general and administrative expenses grew 10% year over year. Escalating costs and supply-chain constraints might weigh on the stock’s performance in the near term.
Given IDEX’s global presence, it is exposed to various environmental laws and regulations across the countries it operates in. Also, the company remains vulnerable to foreign currency and geopolitical issues. In third-quarter 2022, forex woes lowered Fluid & Metering Technologies segment sales by 4%, Health & Science Technologies segment revenues by 5% and Fire & Safety/Diversified Products segment revenues by 6%. Forex woes are expected to lower sales by 5% in the fourth quarter and by 4% during 2022.
Image Source: Zacks Investment Research
In the past six months, this current Zacks Rank #2 (Buy) stock has increased 25.4% compared with the industry’s 17.4% rise.
Other Stocks to Consider
Some other top-ranked companies from the Industrial Products sector are discussed below:
Image: Bigstock
Robust Order Level & Buyouts Aid IDEX (IEX) Despite Cost Woes
IDEX Corporation (IEX - Free Report) is gaining from its solid product portfolio, execution abilities and growth investments (including increased exposure in emerging markets, productivity enhancement and digitization). Also, robust order and backlog levels along with effective pricing actions are expected to be beneficial in the quarters ahead.
Steady demand in the industrial end market with strength in energy, mining and infrastructure markets, and robust municipal water businesses are benefiting its Fluid & Metering Technologies segment. Solid business in semiconductor, analytical instrumentation, material processing and life sciences markets is supporting the Health & Science Technologies segment.
For the Fire, Safety & Diversified product segment, solid momentum in dispensing business, supported by the delivery of North American project volume and continued strength in the global architectural paint market bode well.
IDEX has been strengthening and expanding its businesses through asset additions for a while. The acquisition of Muon Group in November 2022, expanded IDEX’s growing platform of precision technology business within the Health & Science Technologies segment. Also, the commercial synergy potential from the combined entities will likely boost offerings for new and existing customers.
The company’s buyout of KZValve (May 2022) solidified fluid-management solutions in its Banjo Corporation business. The Nexsight, LLC acquisition and its WinCan, Envirosight, MyTana and Pipeline Renewal Technologies businesses (March 2022) drove IEX’s position in the intelligent water technologies market. Also, its purchase of Airtech Group, US Valve Corporation and other entities aided IEX’s Health & Science Technology segment.
IDEX remains committed to maximizing its shareholder returns. The company paid out dividends worth $132.2 million and repurchased shares worth $146.3 million during the first nine months of 2022. Its board also announced an 11% hike in its quarterly dividend rate in May 2022.
However, IEX is experiencing weakness due to supply-related issues in the fire OEM market which in turn is affecting its Fire, Safety & Diversified Products segment. The company is also facing challenges related to cost woes and higher discretionary expenses.
In the third quarter, IDEX’s cost of sales increased 10.5% and selling, general and administrative expenses grew 10% year over year. Escalating costs and supply-chain constraints might weigh on the stock’s performance in the near term.
Given IDEX’s global presence, it is exposed to various environmental laws and regulations across the countries it operates in. Also, the company remains vulnerable to foreign currency and geopolitical issues. In third-quarter 2022, forex woes lowered Fluid & Metering Technologies segment sales by 4%, Health & Science Technologies segment revenues by 5% and Fire & Safety/Diversified Products segment revenues by 6%. Forex woes are expected to lower sales by 5% in the fourth quarter and by 4% during 2022.
Image Source: Zacks Investment Research
In the past six months, this current Zacks Rank #2 (Buy) stock has increased 25.4% compared with the industry’s 17.4% rise.
Other Stocks to Consider
Some other top-ranked companies from the Industrial Products sector are discussed below:
MRC Global Inc. (MRC - Free Report) presently sports a Zacks Rank #1 (Strong Buy). MRC’s earnings surprise in the last four quarters was 103%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
In the past 60 days, MRC Global’s earnings estimates have increased 16.2% for 2022. The stock has rallied 15.6% in the past six months.
Xylem Inc. (XYL - Free Report) presently has a Zacks Rank of 2. XYL’s earnings surprise in the last four quarters was 13.3%, on average.
In the past 60 days, Xylem’s earnings estimates have increased 5% for 2022. The stock has rallied 39.6% in the past six months.
EnerSys (ENS - Free Report) delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank of 2.
ENS’ earnings estimates have increased 0.6% for fiscal 2023 in the past 60 days. The stock has gained 25.7% in the past six months.