AMETEK AME has been boosting its acquisition strategy in order to drive inorganic growth within its Electronic Instruments Group ("EIG") segment.
This is evident from the latest announcement regarding the acquisition of Norwood, MA-based United Electronic Industries ("UEI").
UEI manufactures high-performance test, measurement, simulation and control solutions for the aerospace, defense, energy and semiconductor industries. It is well known for its data acquisition solutions.
Upon completion, UEI will be part of AMETEK’s EIG segment.
The buyout will strengthen AME’s power systems and instruments business. It will also bolster the company’s capabilities in the areas of testing and data acquisition.
AMETEK, Inc. Price and Consensus
AMETEK, Inc. price-consensus-chart | AMETEK, Inc. Quote
Focus on EIG Segment
The latest move is expected to contribute well to the EIG segment’s top-line growth, which contributes significantly to the total revenues of AMETEK.
In second-quarter 2023, the underlined segment generated sales of $1.135 billion, reflecting growth of 10% from the year-ago quarter’s level. The figure accounted for 69% of total sales.
Top-line growth was driven by solid momentum across aerospace and defense end markets. This momentum is likely to be driven further with the UEI buyout.
Our model estimate for 2023 EIG sales stands at $4.63 billion, reflecting growth of 9.4% from 2022’s level.
The growing prospects of the underlined segment are turning investors optimistic about the stock.
Shares of AMETEK have gained 10.2% in the year-to-date period, outperforming the industry’s growth of 3.5%.
Strategic Acquisitions: Key Catalyst
Strategic acquisitions have been shaping AMETEK’s growth trajectory for the past few years. In fact, they form an integral part of the company’s Growth Model.
From 2018 to 2022, AMETEK acquired 17 companies and generated a total of $1.3 billion of annualized sales.
Thus, the latest move bodes well for AME’s growing efforts toward strengthening its Growth Model.
A solid momentum in its Growth Model is expected to aid its financial performance in the days ahead.
Our model estimate for 2023 total sales is projected at $6.6 billion, reflecting growth of 7.3% from 2022.
Zacks Rank & Other Stocks to Consider
Currently, AMETEK carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector are Asure Software ASUR, Arista Networks ANET and Badger Meter BMI. Asure Software currently sports a Zacks Rank #1 (Strong Buy), and Arista Networks and Badger Meter carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Asure Software shares have gained 23.8% in the year-to-date period. ASUR’s long-term earnings growth rate is projected at 27%.
Arista Networks shares have gained 61.9% in the year-to-date period. The long-term earnings growth rate for ANET is projected at 18.75%.
Badger Meter shares have gained 47.3% in the year-to-date period. BMI’s long-term earnings growth rate is projected at 15.05%.
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