IDEX (IEX) Hits New 52-Week High on Solid Growth Drivers
Shares of industrial goods manufacturer IDEX Corporation IEX scaled a new 52-week high of $107.53 in Friday’s trading session for a healthy one-year return of 29.7%. Barring minor hiccups, the company’s share price has steadily been on an uptrend since mid-April. This Zacks Rank #3 (Hold) stock has the potential for further price appreciation with long-term earnings growth expectations of 12.0%.
Growth Drivers
IDEX has historically generated a healthy cash flow that allows management the opportunity to invest in product innovations, acquisitions and business development. The company intends to optimize its cost structure, increase its competitiveness and reallocate resources to improve profitability. The long-term growth prospects of the company therefore appear to be quite encouraging.
With a diligent execution of operational plans, IDEX has outperformed the Zacks categorized Machinery-General Industrial sector in the last three months with an average return of 15.3% compared with a gain of 5.4% for the latter. IDEX is currently striving to expand its businesses in the emerging markets by focusing on organic growth. The company reported organic growth of 5% in the first quarter of 2017. It witnessed growth for the first time since the fourth quarter of 2014, owing to a steady performance. IDEX further aims to increase its market exposure and improve sales mix by continually developing new products. With a flexible yet disciplined focus on cost and productivity, IDEX expects to successfully tap newer markets to augment its revenues.
Acquisitions have been IDEX’s most favored mode of penetrating unexplored markets. These acquisitions expand its geographic reach, fill technology gaps and strengthen foothold in the existing markets while expanding its product lines. The company reported strong first-quarter results with healthy year-over-year increase in earnings and revenues. IDEX also generated record order levels and witnessed significantly higher demand in the North American industrial markets with a marked improvement in larger capital projects.
With solid quarterly results and robust demand patterns, IDEX raised its earlier guidance for 2017. The company currently expects 3–4% organic growth in 2017 with adjusted earnings of $4.00–$4.17 per share, up from earlier projection of 1–2% organic growth and adjusted earnings of $3.87–$3.95. The favorable growth dynamics offer an enticing investment proposition for the investors and probably raised investor confidence, driving the company’s shares to a fresh 52-week high.
Stocks to Consider
Some better-ranked stocks in the industry include Altra Industrial Motion Corp. AIMC, Applied Industrial Technologies, Inc. AIT and Graco Inc. GGG, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial topped estimates in each of the trailing four quarters with an average positive earnings surprise of 15.9%.
Applied Industrial has a long-term earnings growth expectation of 12%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 9.8%.
Graco has a long-term earnings growth expectation of 10.3%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 13.9%.
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