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Strong Product Portfolio Aids AMETEK (AME), Risks Persist
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On Apr 6, we issued an updated research report on technology firm, AMETEK Inc. (AME - Free Report) .The stock carries a Zacks Rank #3 (Hold).
AMETEK is a leading worldwide manufacturer of electronic appliances and electromechanical devices. The company sells its products globally through two major operating groups — the Electronic Instruments Group (“EIG”) and Electromechanical Group (“EMG”).
Growth Drivers
Price Performance: AMETEK has outperformed its industry in the past year. Shares of the company have gained 34.9% compared with the industry’s growth of 26.2% in the same time period.
AMETEK’s top-line growth is benefiting from improved end-market demand and market share gains. The company continues to reap benefits from the execution of its four core growth strategies of operational excellence, global market expansion, investments in product development and strategic acquisitions.
Also, the diversification in end markets like aerospace, defense, medical, automation and other industrial markets, with consistent focus on technology innovation and customer support through all phases of the economic cycle, has enabled the company post solid results over the past few quarters. A sustained drive toward geographic and market diversification has further helped AMETEK expand its customer base.
Moreover, the company’s strong business portfolio serves as another growth driver. In fact, AMETEK has been consistently introducing new and improved products that added to its vastly differentiated product pipeline. New products introduced over the last three years comprised 24% of revenues. This indicates that the company is not only good at developing products but also at marketing them.
Despite the uncertainties prevailing in the global economy, AMETEK has bullish revenue and earnings expectations. The ongoing revolution in electronic appliances and electromechanical devices enables the company to capitalize on the opportunities and strengthen its position in the market. It also expects to leverage on the solid growth potential of the acquired companies to drive robust performance in the future.
For the first quarter of 2018, AMETEK expects sales to be up low-double digits year over year. Earnings are expected in the range of 70-72 cents per share, up 17-20% from the prior-year quarter.
For 2018, AMETEK expects sales to increase approximately 7-9%, driven by contributions from recent acquisitions and 3-5% organic sales growth. Earnings are expected to be in the range of $2.95-$3.05 per share, up 13-17% year over year.
Headwinds
A major portion of AMETEK’s revenues is generated from operations outside the United States. Also, significant dollar strength and adverse foreign currency fluctuations erode the profitability of the company.
Furthermore, though acquisitions are part of AMETEK’s growth strategy, unsuccessful execution and integration of new buyouts and an increase in acquisition costs due to stiff competition are likely to negatively impact its sales/margin performance.
Long-term earnings per share growth rate for Stamps.com, PetMed and Agilent is projected to be 15%, 10% and 11.2%, respectively.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Strong Product Portfolio Aids AMETEK (AME), Risks Persist
On Apr 6, we issued an updated research report on technology firm, AMETEK Inc. (AME - Free Report) .The stock carries a Zacks Rank #3 (Hold).
AMETEK is a leading worldwide manufacturer of electronic appliances and electromechanical devices. The company sells its products globally through two major operating groups — the Electronic Instruments Group (“EIG”) and Electromechanical Group (“EMG”).
Growth Drivers
Price Performance: AMETEK has outperformed its industry in the past year. Shares of the company have gained 34.9% compared with the industry’s growth of 26.2% in the same time period.
AMETEK’s top-line growth is benefiting from improved end-market demand and market share gains. The company continues to reap benefits from the execution of its four core growth strategies of operational excellence, global market expansion, investments in product development and strategic acquisitions.
Also, the diversification in end markets like aerospace, defense, medical, automation and other industrial markets, with consistent focus on technology innovation and customer support through all phases of the economic cycle, has enabled the company post solid results over the past few quarters. A sustained drive toward geographic and market diversification has further helped AMETEK expand its customer base.
Moreover, the company’s strong business portfolio serves as another growth driver. In fact, AMETEK has been consistently introducing new and improved products that added to its vastly differentiated product pipeline. New products introduced over the last three years comprised 24% of revenues. This indicates that the company is not only good at developing products but also at marketing them.
Despite the uncertainties prevailing in the global economy, AMETEK has bullish revenue and earnings expectations. The ongoing revolution in electronic appliances and electromechanical devices enables the company to capitalize on the opportunities and strengthen its position in the market. It also expects to leverage on the solid growth potential of the acquired companies to drive robust performance in the future.
For the first quarter of 2018, AMETEK expects sales to be up low-double digits year over year. Earnings are expected in the range of 70-72 cents per share, up 17-20% from the prior-year quarter.
For 2018, AMETEK expects sales to increase approximately 7-9%, driven by contributions from recent acquisitions and 3-5% organic sales growth. Earnings are expected to be in the range of $2.95-$3.05 per share, up 13-17% year over year.
Headwinds
A major portion of AMETEK’s revenues is generated from operations outside the United States. Also, significant dollar strength and adverse foreign currency fluctuations erode the profitability of the company.
Furthermore, though acquisitions are part of AMETEK’s growth strategy, unsuccessful execution and integration of new buyouts and an increase in acquisition costs due to stiff competition are likely to negatively impact its sales/margin performance.
AMETEK, Inc. Price and Consensus
AMETEK, Inc. Price and Consensus | AMETEK, Inc. Quote
Zacks Rank & Stocks to Consider
Some better-ranked stocks in the technology sector are Stamps.com Inc. , PetMed Express (PETS - Free Report) and Agilent Technologies (A - Free Report) . While Stamps.com sports a Zacks Rank #1 (Strong Buy), PetMed and Agilent carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings per share growth rate for Stamps.com, PetMed and Agilent is projected to be 15%, 10% and 11.2%, respectively.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>