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Why Is Ametek (AME) Up 8.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Ametek (AME - Free Report) . Shares have added about 8.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ametek due for a pullback? 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 catalysts.
AMETEK Beats Q4 Earnings Estimates
AMETEK reported fourth-quarter 2023 adjusted earnings of $1.68 per share, beating the Zacks Consensus Estimate by 3.7%. The bottom line rose 11% on a year-over-year basis.
Net sales of $1.73 billion surpassed the Zacks Consensus Estimate by 0.3%. The top line rose 6.5% year over year.
Top-line growth was driven by solid momentum across the Electronic Instruments Group (EIG) and Electromechanical Group (EMG) segments.
AMETEK’s proper execution of the four core growth strategies, including operational excellence, global market expansion, investments in product development and acquisitions, is expected to continue aiding financial growth in the near and long term. The AMETEK Growth Model is likely to continue driving its business performance.
Segments in Detail
EIG (71.4% of total sales): AMETEK generated sales of $1.24 billion from the segment, reflecting growth of 7% year over year. The figure topped the consensus mark of $1.131 billion.
EMG (28.6%): The segment generated $494.7 million in sales in the fourth quarter, which improved 6% on a year-over-year basis. The figure came below the Zacks Consensus Estimate of $520 million.
Operating Details
For the fourth quarter, operating expenses were $1.29 billion, up 4.8% year over year. The figure contracted 120 basis points (bps) from the year-ago quarter’s level as a percentage of net sales to 74.3%.
Operating margin was 25.7%, which expanded 120 bps from the year-ago quarter’s figure.
Operating margin for EIG expanded 250 bps year over year to 29% and that of EMG contracted 190 bps from the year-ago quarter’s level to 22.7%.
Balance Sheet
As of Dec 31, 2023, cash and cash equivalents were $409.8 million, down from $841.9 million as of Sep 30, 2023.
Long-term debt was $1.895 billion as of Dec 31, 2023, up from $1.86 billion as of Sep 30, 2023.
Guidance
For first-quarter 2024, management expects sales growth in low-double digits from the year-ago quarter’s reported figure.
AMETEK expects adjusted earnings of $1.56-$1.60 per share, suggesting growth of 5-7% from the year-ago quarter’s reported number.
For 2024, AME expects sales growth in the low-double digits from 2023 levels.
Adjusted earnings are expected in the band of $6.70-$6.85 per share, suggesting growth of 5-7% from 2023 levels.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Ametek has an average Growth Score of C, a grade with the same score on the momentum front. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ametek has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Ametek is part of the Zacks Electronics - Testing Equipment industry. Over the past month, Teradyne (TER - Free Report) , a stock from the same industry, has gained 9.5%. The company reported its results for the quarter ended December 2023 more than a month ago.
Teradyne reported revenues of $670.6 million in the last reported quarter, representing a year-over-year change of -8.4%. EPS of $0.79 for the same period compares with $0.92 a year ago.
For the current quarter, Teradyne is expected to post earnings of $0.37 per share, indicating a change of -32.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
Teradyne has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Why Is Ametek (AME) Up 8.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Ametek (AME - Free Report) . Shares have added about 8.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ametek due for a pullback? 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 catalysts.
AMETEK Beats Q4 Earnings Estimates
AMETEK reported fourth-quarter 2023 adjusted earnings of $1.68 per share, beating the Zacks Consensus Estimate by 3.7%. The bottom line rose 11% on a year-over-year basis.
Net sales of $1.73 billion surpassed the Zacks Consensus Estimate by 0.3%. The top line rose 6.5% year over year.
Top-line growth was driven by solid momentum across the Electronic Instruments Group (EIG) and Electromechanical Group (EMG) segments.
AMETEK’s proper execution of the four core growth strategies, including operational excellence, global market expansion, investments in product development and acquisitions, is expected to continue aiding financial growth in the near and long term. The AMETEK Growth Model is likely to continue driving its business performance.
Segments in Detail
EIG (71.4% of total sales): AMETEK generated sales of $1.24 billion from the segment, reflecting growth of 7% year over year. The figure topped the consensus mark of $1.131 billion.
EMG (28.6%): The segment generated $494.7 million in sales in the fourth quarter, which improved 6% on a year-over-year basis. The figure came below the Zacks Consensus Estimate of $520 million.
Operating Details
For the fourth quarter, operating expenses were $1.29 billion, up 4.8% year over year. The figure contracted 120 basis points (bps) from the year-ago quarter’s level as a percentage of net sales to 74.3%.
Operating margin was 25.7%, which expanded 120 bps from the year-ago quarter’s figure.
Operating margin for EIG expanded 250 bps year over year to 29% and that of EMG contracted 190 bps from the year-ago quarter’s level to 22.7%.
Balance Sheet
As of Dec 31, 2023, cash and cash equivalents were $409.8 million, down from $841.9 million as of Sep 30, 2023.
Long-term debt was $1.895 billion as of Dec 31, 2023, up from $1.86 billion as of Sep 30, 2023.
Guidance
For first-quarter 2024, management expects sales growth in low-double digits from the year-ago quarter’s reported figure.
AMETEK expects adjusted earnings of $1.56-$1.60 per share, suggesting growth of 5-7% from the year-ago quarter’s reported number.
For 2024, AME expects sales growth in the low-double digits from 2023 levels.
Adjusted earnings are expected in the band of $6.70-$6.85 per share, suggesting growth of 5-7% from 2023 levels.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Ametek has an average Growth Score of C, a grade with the same score on the momentum front. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ametek has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Ametek is part of the Zacks Electronics - Testing Equipment industry. Over the past month, Teradyne (TER - Free Report) , a stock from the same industry, has gained 9.5%. The company reported its results for the quarter ended December 2023 more than a month ago.
Teradyne reported revenues of $670.6 million in the last reported quarter, representing a year-over-year change of -8.4%. EPS of $0.79 for the same period compares with $0.92 a year ago.
For the current quarter, Teradyne is expected to post earnings of $0.37 per share, indicating a change of -32.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
Teradyne has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.