It has been about a month since the last earnings report for Idex (IEX Quick QuoteIEX - Free Report) . Shares have lost about 2.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Idex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

IDEX Q1 Earnings & Revenues Beat, Increase Y/Y

IDEX reported impressive first-quarter 2023 results. The company’s earnings surpassed the Zacks Consensus Estimate by 3%, whereas sales beat the same by 3.4%.

In the reported quarter, IDEX’s adjusted earnings were $2.09 per share, beating the Zacks Consensus Estimate of $2.03 per share. On a year-over-year basis, the bottom line increased 6.6% from the year-ago quarter’s $1.96. Healthy segmental results favorably impacted the quarter’s earnings.

Earnings for the first quarter exceeded management’s projection of $1.98-$2.03 per share.

Revenue Details

In the quarter under review, IDEX’s net sales were $845.4 million, reflecting year-over-year growth of 12.6%. Organic sales in the quarter increased 6% year over year, higher than 3-5% growth expected by IEX. Acquired assets boosted sales 9%. Foreign currency translation left a negative impact of 2%.

IDEX’s top line surpassed the Zacks Consensus Estimate of $817 million.

IEX reports net sales under three business segments, the results of which are discussed below:

Revenues from Fluid & Metering Technologies totaled $321.8 million, increasing 18% year over year. Our estimate for segmental revenues was $301.9 million. Organic sales were up 9% and synergies from acquired assets added 11%. Foreign currency translation left a negative impact of 2%.

Revenues from Health & Science Technologies totaled $351 million, reflecting year-over-year growth of 11%. Our estimate for segmental revenues was $346.4 million. Organic sales in the quarter increased 3% year over year, while acquired assets boosted sales 11%. Foreign currency translation left a negative impact of 3%.

Revenues from Fire & Safety/Diversified Products totaled $174.4 million, rising 6% year over year. Our estimate for segmental revenues was $175.8 million. The results were aided by a 9% increase in organic sales but suffered 3% forex woes.

Margin Profile

In the quarter under review, IDEX’s cost of sales increased 13.3% year over year to $462.9 million. The gross profit was $382.5 million, up 11.7% year over year, while the gross margin was 45.2%, compared with 45.6% reported in the year-ago quarter.

Selling, general and administrative expenses increased 22.9% year over year to $189.7 million. The same represented 22.4% of revenues. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter under review increased 7% year over year to $229.8 million. The adjusted EBITDA margin decreased 140 bps year over year to 28.6%.

The operating income was $192.3 million, up 2.5% year over year, whereas the margin was 22.7%, down 230 bps year over year. Interest expenses in the quarter increased 37.9% year over year to $13.1 million.

Balance Sheet and Cash Flow

While exiting the first quarter, IDEX’s cash and cash equivalents decreased 18.7% to $510.7 million, compared with $430.2 million recorded at the end of fourth-quarter 2022. Long-term borrowings were $1,470.7 million, compared with $1,468.7 million recorded at the end of fourth-quarter 2022.

In the first three months of 2023, IDEX generated net cash of $147.9 million from operating activities, increasing 85.7% from the year-ago period. Capital used for purchasing property, plant and equipment was $26.6 million, compared with $16.1 million in December 2022. Free cash flow was $121.3 million, up 90.7% year over year.

IEX paid out dividends totaling $45.5 million. However, the company did not repurchase any common stock in the quarter.

IEX did not spend any amount on acquisitions in the first three months of 2023.

Outlook

For second-quarter 2023, IDEX anticipates adjusted earnings of $2.10-$2.13 per share and approximately 3% growth in organic sales from the respective year-ago readings.

IEX predicts EPS of $1.86-$1.89 per share for second-quarter 2023.

For 2023, IDEX anticipates adjusted earnings of $8.25-$8.55 per share, compared with $8.50-$8.80 per share anticipated earlier. Full-year earnings are predicted to be $7.30-$7.60 per share, compared with $7.55-$7.85 per share expected earlier.

Organic sales are predicted to grow 0-3% for 2023, compared with 1-5% predicted earlier.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Idex has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Idex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.