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5 Reasons Why You Should Avoid IDEX Stock at the Moment
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Industrial goods manufacturer IDEX Corporation (IEX - Free Report) reported sedate third-quarter 2016 results with a year-over-year decrease in GAAP earnings despite a healthy improvement in revenues. The company expects organic revenue for full-year 2016 to be down 1%.
Headquartered in Lake Forest, IL, IDEX specializes in a diverse range of applications such as fluid and metering technologies; health and science technologies; and fire, safety and other products built to customer specifications.
Earnings Estimate Revisions
Analysts have not been favoring IDEX stock lately, hence the earnings scenario is looking gloomy at the moment.
It underperformed the Zacks categorized Manufacturing - General Industrial industrywith an average return of 4.4% compared with 11.9% for the latter, over the last three months. Despite downward movement, over the past 90 days, consensus estimate for the current quarter has remained steady at 93 cents per share.
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock. It is easily one of the most popular financial ratios in the world.
Currently, IDEX has a PE of 24.23, which compares unfavorably with the broader industry’s trailing 12 months PE ratio of 23.02. This indicates that the stock is a bit overvalued right now, compared to its peers.
P/S Ratio
Another key metric to note is the Price/Sales (P/S) ratio. Right now, IDEX has a P/S ratio of about 3.35. This is higher than the industry average of 2.03.
Earnings Growth
Nothing is more important than earnings growth as surging profit levels is what most investors are after. Earnings growth in the double digits is definitely necessary and it is often an indication of strong prospects (and stock price gains) for the company.
This is not the case for IDEX, as it is looking to grow at a rate of 9.91%, which is below the industry average which calls for EPS (earnings per share) growth of 10.53%.
Macroeconomic Woes
The company operates in a highly competitive industry. Maintaining and improving its competitive position entails continued investment in manufacturing, engineering, quality standards, marketing, customer service and support and distribution networks. This involves huge recurring R&D expenses that increase its operating costs. This also reduces IDEX’s price control over its products, which often leads to loss of market share, decline in top-line growth and lower operating margin.
To add to the woes, IDEX procures substantial amount of raw materials and components from suppliers across the globe, which make it susceptible to various operating risks. These include the availability and prices for raw materials, curtailment or change in parts and components, interruptions in production by suppliers, changes in exchange rates and prevailing price levels. These affect its cash flow and restrict its growth momentum to some extent.
Bottom Line
In aggregate, IDEX currently has a Zacks VGM Score of ‘D’. Overall sluggish macroeconomic conditions, unimpressive financial metrics and bearish estimate revisions signal that investors should avoid the stock at the moment.
NV5 Global has a long-term earnings growth expectation of 20%. It has beaten estimates thrice in the trailing four quarters for an average positive earnings surprise of 6.9%.
Gartner has long-term earnings growth expectation of 17.3%. It has beaten estimates in each of the trailing four quarters with an average positive earnings surprise of 14.5%.
Clear Channel Outdoor is global leader in outdoor advertising displays in countries across continents. The company currently has long-term earnings growth expectation of 3%.
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5 Reasons Why You Should Avoid IDEX Stock at the Moment
Industrial goods manufacturer IDEX Corporation (IEX - Free Report) reported sedate third-quarter 2016 results with a year-over-year decrease in GAAP earnings despite a healthy improvement in revenues. The company expects organic revenue for full-year 2016 to be down 1%.
Headquartered in Lake Forest, IL, IDEX specializes in a diverse range of applications such as fluid and metering technologies; health and science technologies; and fire, safety and other products built to customer specifications.
Earnings Estimate Revisions
Analysts have not been favoring IDEX stock lately, hence the earnings scenario is looking gloomy at the moment.
It underperformed the Zacks categorized Manufacturing - General Industrial industrywith an average return of 4.4% compared with 11.9% for the latter, over the last three months. Despite downward movement, over the past 90 days, consensus estimate for the current quarter has remained steady at 93 cents per share.
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock. It is easily one of the most popular financial ratios in the world.
Currently, IDEX has a PE of 24.23, which compares unfavorably with the broader industry’s trailing 12 months PE ratio of 23.02. This indicates that the stock is a bit overvalued right now, compared to its peers.
P/S Ratio
Another key metric to note is the Price/Sales (P/S) ratio. Right now, IDEX has a P/S ratio of about 3.35. This is higher than the industry average of 2.03.
Earnings Growth
Nothing is more important than earnings growth as surging profit levels is what most investors are after. Earnings growth in the double digits is definitely necessary and it is often an indication of strong prospects (and stock price gains) for the company.
This is not the case for IDEX, as it is looking to grow at a rate of 9.91%, which is below the industry average which calls for EPS (earnings per share) growth of 10.53%.
Macroeconomic Woes
The company operates in a highly competitive industry. Maintaining and improving its competitive position entails continued investment in manufacturing, engineering, quality standards, marketing, customer service and support and distribution networks. This involves huge recurring R&D expenses that increase its operating costs. This also reduces IDEX’s price control over its products, which often leads to loss of market share, decline in top-line growth and lower operating margin.
To add to the woes, IDEX procures substantial amount of raw materials and components from suppliers across the globe, which make it susceptible to various operating risks. These include the availability and prices for raw materials, curtailment or change in parts and components, interruptions in production by suppliers, changes in exchange rates and prevailing price levels. These affect its cash flow and restrict its growth momentum to some extent.
Bottom Line
In aggregate, IDEX currently has a Zacks VGM Score of ‘D’. Overall sluggish macroeconomic conditions, unimpressive financial metrics and bearish estimate revisions signal that investors should avoid the stock at the moment.
IDEX currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the sector include NV5 Global, Inc. (NVEE - Free Report) , Gartner, Inc. (IT - Free Report) and Clear Channel Outdoor Holdings, Inc. (CCO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
NV5 Global has a long-term earnings growth expectation of 20%. It has beaten estimates thrice in the trailing four quarters for an average positive earnings surprise of 6.9%.
Gartner has long-term earnings growth expectation of 17.3%. It has beaten estimates in each of the trailing four quarters with an average positive earnings surprise of 14.5%.
Clear Channel Outdoor is global leader in outdoor advertising displays in countries across continents. The company currently has long-term earnings growth expectation of 3%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>