We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
IDEX Strives to Counter Muted Growth Through Core Focus
Read MoreHide Full Article
On Apr 4, we updated the research report on industrial goods manufacturer, IDEX Corporation (IEX - Free Report) .
Headquartered in Lake Forest, IL, IDEX is an applied solutions firm. It specializes in a diverse range of applications such as fluid and metering technologies, health and science technologies, and fire, safety and other products.
With operations across five continents, IDEX’s performance is exposed to the adverse impact of macroeconomic cycles in the U.S. and international markets. Given its global presence, the company also faces unfavorable foreign currency movements, impacting its bottom-line growth. In addition, its business strategy hinges on acquiring companies and making investments that complement its existing businesses. These acquisitions entail huge integration costs which often become a drag on the profitability of IDEX.
In addition, 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 and prevailing price levels. These affect its cash flow and restrict its growth momentum to some extent. In the last three months, IDEX underperformed the Zacks categorized Manufacturing - General Industrial sector with an average return of 2.3% compared with 7.4% gain for the latter.
IDEX is striving to counter the muted growth environment by improving productivity and conducting heavy restructuring initiatives across its portfolio. At the same time, it aims to exploit suitable acquisition opportunities to fuel its inorganic growth momentum. These acquisitions expand its geographic reach, fill technology gaps and strengthen its foothold in the existing markets along with expanding its product lines.
The company also aims to increase its market exposure and improve sales mix by continually developing new products. With a flexible yet disciplined focus on expenses and productivity, it intends to optimize the cost structure, increase competitiveness and reallocate resources to improve profitability in the future.
Barnes has a long-term earnings growth expectation of 9% and is currently trading at a forward P/E of 19.0x.
Graco has a long-term earnings growth expectation of 10.3%.
Illinois Tool Works has a long-term earnings growth expectation of 7.5%. It topped estimates in each of the trailing four quarters with an average earnings surprise of 2.2%.
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 >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
IDEX Strives to Counter Muted Growth Through Core Focus
On Apr 4, we updated the research report on industrial goods manufacturer, IDEX Corporation (IEX - Free Report) .
Headquartered in Lake Forest, IL, IDEX is an applied solutions firm. It specializes in a diverse range of applications such as fluid and metering technologies, health and science technologies, and fire, safety and other products.
With operations across five continents, IDEX’s performance is exposed to the adverse impact of macroeconomic cycles in the U.S. and international markets. Given its global presence, the company also faces unfavorable foreign currency movements, impacting its bottom-line growth. In addition, its business strategy hinges on acquiring companies and making investments that complement its existing businesses. These acquisitions entail huge integration costs which often become a drag on the profitability of IDEX.
In addition, 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 and prevailing price levels. These affect its cash flow and restrict its growth momentum to some extent. In the last three months, IDEX underperformed the Zacks categorized Manufacturing - General Industrial sector with an average return of 2.3% compared with 7.4% gain for the latter.
IDEX is striving to counter the muted growth environment by improving productivity and conducting heavy restructuring initiatives across its portfolio. At the same time, it aims to exploit suitable acquisition opportunities to fuel its inorganic growth momentum. These acquisitions expand its geographic reach, fill technology gaps and strengthen its foothold in the existing markets along with expanding its product lines.
The company also aims to increase its market exposure and improve sales mix by continually developing new products. With a flexible yet disciplined focus on expenses and productivity, it intends to optimize the cost structure, increase competitiveness and reallocate resources to improve profitability in the future.
IDEX currently has a Zacks Rank #3 (Hold). Some better- ranked stocks in the industry include Barnes Group Inc. (B - Free Report) , Graco Inc. (GGG - Free Report) and Illinois Tool Works Inc. (ITW - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Barnes has a long-term earnings growth expectation of 9% and is currently trading at a forward P/E of 19.0x.
Graco has a long-term earnings growth expectation of 10.3%.
Illinois Tool Works has a long-term earnings growth expectation of 7.5%. It topped estimates in each of the trailing four quarters with an average earnings surprise of 2.2%.
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 >>