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Here's Why You Should Hold IDEX (IEX) in Your Portfolio Now
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IDEX Corporation (IEX - Free Report) is poised to benefit from strength in the Fire & Safety/Diversified Products (“FSD”) segment. Strong momentum in the fire and rescue business is driving the performance of the segment. In the third quarter of 2023, the FSD segment’s adjusted EBITDA margin increased 150 bps to 29.3%, driven by solid price-cost performance, operational productivity and favorable volume leverage.
The company remains focused on acquiring businesses to gain access to new customers, regions and product lines. In December 2023, IEX acquired advanced material science solutions provider STC Material Solutions for $206 million. This buyout expanded the company’s growing expertise in the material sciences space.
The acquisition of Iridian Spectral in May 2023 expanded IDEX’s vast array of optical technology offerings. The company anticipates buyout synergies to boost sales by 2% in the fourth quarter and 4% in 2023.
IEX has been committed to rewarding shareholders through dividend payouts and share repurchases. For instance, in the first nine months of 2023, it paid dividends of $142.3 million. In 2022, it distributed dividends of $177.4 million and repurchased common stocks worth $148.1 million. It announced a hike of 7% in its quarterly dividend rate in May 2023.
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 4.5% compared with the industry’s 15.5% growth.
However, weakness in the Health & Science Technologies ("HST") segment due to softness in the life sciences, analytical instrumentation, semiconductor and industrial end markets raises concerns. In the third quarter, the segmental adjusted EBITDA margin was down 410 bps year over year due to lower volume leverage, unfavorable mix and soaring employee-related costs. A slowdown in the industrial end market and continued customer destocking in the agriculture business have been ailing the Fluid & Metering Technologies segment.
The escalating cost of goods sold has also been a major concern for the company. For instance, its cost of sales increased 6.6% year over year in the first nine months of 2023 due to an increase in raw material costs. Selling, general and administrative expenses also grew 9.6% year over year in the same period due to higher employee-related costs.
Crane delivered a trailing four-quarter average earnings surprise of 29.8%. In the past 60 days, the Zacks Consensus Estimate for CR’s 2023 earnings has been unchanged. The stock has rallied 35% in the past three months.
Flowserve has a trailing four-quarter average earnings surprise of 27.3%. The consensus estimate for FLS’ 2023 earnings has remained stable in the past 60 days. Shares of the company have gained 6.1% in the past three months.
Parker-Hannifin delivered a trailing four-quarter average earnings surprise of 11.8%. In the past 60 days, the consensus estimate for PH’s fiscal 2024 earnings has improved by 0.4%. The stock has risen 21.6% in the past three months.
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Here's Why You Should Hold IDEX (IEX) in Your Portfolio Now
IDEX Corporation (IEX - Free Report) is poised to benefit from strength in the Fire & Safety/Diversified Products (“FSD”) segment. Strong momentum in the fire and rescue business is driving the performance of the segment. In the third quarter of 2023, the FSD segment’s adjusted EBITDA margin increased 150 bps to 29.3%, driven by solid price-cost performance, operational productivity and favorable volume leverage.
The company remains focused on acquiring businesses to gain access to new customers, regions and product lines. In December 2023, IEX acquired advanced material science solutions provider STC Material Solutions for $206 million. This buyout expanded the company’s growing expertise in the material sciences space.
The acquisition of Iridian Spectral in May 2023 expanded IDEX’s vast array of optical technology offerings. The company anticipates buyout synergies to boost sales by 2% in the fourth quarter and 4% in 2023.
IEX has been committed to rewarding shareholders through dividend payouts and share repurchases. For instance, in the first nine months of 2023, it paid dividends of $142.3 million. In 2022, it distributed dividends of $177.4 million and repurchased common stocks worth $148.1 million. It announced a hike of 7% in its quarterly dividend rate in May 2023.
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 4.5% compared with the industry’s 15.5% growth.
However, weakness in the Health & Science Technologies ("HST") segment due to softness in the life sciences, analytical instrumentation, semiconductor and industrial end markets raises concerns. In the third quarter, the segmental adjusted EBITDA margin was down 410 bps year over year due to lower volume leverage, unfavorable mix and soaring employee-related costs. A slowdown in the industrial end market and continued customer destocking in the agriculture business have been ailing the Fluid & Metering Technologies segment.
The escalating cost of goods sold has also been a major concern for the company. For instance, its cost of sales increased 6.6% year over year in the first nine months of 2023 due to an increase in raw material costs. Selling, general and administrative expenses also grew 9.6% year over year in the same period due to higher employee-related costs.
Key Picks
We have highlighted three better-ranked stocks from the same space, namely Crane Company (CR - Free Report) , Flowserve Corporation (FLS - Free Report) and Parker-Hannifin Corporation (PH - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Crane delivered a trailing four-quarter average earnings surprise of 29.8%. In the past 60 days, the Zacks Consensus Estimate for CR’s 2023 earnings has been unchanged. The stock has rallied 35% in the past three months.
Flowserve has a trailing four-quarter average earnings surprise of 27.3%. The consensus estimate for FLS’ 2023 earnings has remained stable in the past 60 days. Shares of the company have gained 6.1% in the past three months.
Parker-Hannifin delivered a trailing four-quarter average earnings surprise of 11.8%. In the past 60 days, the consensus estimate for PH’s fiscal 2024 earnings has improved by 0.4%. The stock has risen 21.6% in the past three months.