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AMETEK (AME) Q4 Earnings Surpass Estimates, Revenues Up Y/Y

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AMETEK, Inc. (AME - Free Report) reported fourth-quarter 2019 adjusted earnings of $1.08 per share, which beat the Zacks Consensus Estimate by 4.8% and also surpassed management’s guidance of $1.01-$1.03. The figure improved 13% from the year-ago quarter and 1.9% sequentially.

Net sales improved 3% on a year-over-year basis and 2.2% sequentially to $1.30 billion.

Strong performance by the company’s Electronic Instruments Group (EIG) segment drove sales growth during the reported quarter. Further, positive contributions from strategic acquisitions remain a positive. Additionally, improved operational activities drove the results.

However, the top line figure fell short of the Zacks Consensus Estimate of $1.34 billion.

Notably, the company faced weakness in its Electromechanical Group (EMG) segment during the fourth quarter, which remains a concern.

Nevertheless, the company’s proper execution of the four core growth strategies of operational excellence, global market expansion, investments in product development and acquisitions are expected to continue benefiting business growth in the near term as well as the long haul.

Segments in Detail

EIG (67.5% of total sales): The company generated $880.2 million of sales from this segment, reflecting growth of 7% from the year-ago quarter. The benefits from acquisitions of Gatan, Telular and Spectro Scientific drove year-over-year sales within this segment.

EMG (32.5% of sales): This segment generated $424.7 million of sales in the fourth quarter, which decreased 5% on a year-over-year basis. Nevertheless, the company witnessed strong operational performance within the segment.

AMETEK, Inc. Price, Consensus and EPS Surprise


AMETEK, Inc. Price, Consensus and EPS Surprise

AMETEK, Inc. price-consensus-eps-surprise-chart | AMETEK, Inc. Quote

Operating Details

For the fourth quarter, operating expenses were $1.01 billion, up 1.8% year over year. However, the figure contracted 60 basis points (bps) from the year-ago quarter as a percentage of net sales.

Consequently, operating margin was 22.8%, which expanded 60 bps from the year-ago reported figure.

Segment wise, operating margins for EIG and EMG were 26.1% and 19.9%, expanding 10 bps and 60 bps, respectively, on a year-over-year basis.

Balance Sheet

As of Dec 31, 2019, cash and cash equivalents were $393.03 million, down from $735.4 million as of Sep 30, 2019.

Further, inventories amounted to $624.6 million at the end of the fourth quarter compared with $623.8 million at the end of the prior quarter.

Long-term debt was $2.3 billion, up from $2.2 billion in the previous quarter.


For first-quarter 2020, AMETEK expects sales to improve by a low-single digit on a year-over-year basis. The Zacks Consensus Estimate for sales is pegged at $1.34 billion.

Adjusted earnings are anticipated to be $1.01-$1.04 per diluted share, reflecting year-over-year growth of 1-4%. The Zacks Consensus Estimate for earnings is projected at $1.05 per share.

For 2020, the company anticipates total sales to improve by low-single digit from 2019. The Zacks Consensus Estimate is pegged at $5.37 billion.

Further, AMETEK expects adjusted earnings per share in the range of $4.24-$4.38 per share, reflecting growth of 1-5% from 2019. The Zacks Consensus Estimate for 2020 earnings is pegged at $4.36 per share.

Zacks Rank & Key Picks

AMETEK currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Itron, Inc. ITRI, NetEase, Inc. NTES and Five9, Inc. FIVN. While Itron sports a Zacks Rank #1 (Strong Buy), NetEase and Five9 carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Itron, NetEase and Five9 is currently pegged at 25%, 41.99% and 10%, respectively.

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