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AMETEK (AME) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research

AMETEK, Inc. AME is scheduled to report fourth-quarter 2019 results on Feb 5, before the market opens.

The company surpassed the Zacks Consensus Estimate in the trailing four quarters, with the average earnings surprise being 3.1%.

Trend in Estimate Revision

For the fourth quarter, AMETEK expects year-over-year sales growth in mid-single digits. The Zacks Consensus Estimate for sales is pegged at $1.34 billion.

Further, the company expects fourth-quarter adjusted earnings between $1.01 and $1.03 per share, suggesting growth of 5-7% from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pegged at $1.03 per share.

AMETEK, Inc. Price and EPS Surprise

AMETEK, Inc. Price and EPS Surprise

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

Performance in the Last Reported Quarter

In the third quarter, AMETEK reported earnings of $1.06 per share. It delivered a positive earnings surprise of 4.95%.

Net sales rose 7% on a year-over-year basis to $1.28 billion. However, revenues missed the Zacks Consensus Estimate of $1.29 billion.

Let’s see how things have shaped up prior to this announcement.

Factors to Consider

The company’s proper execution of core growth strategies — including operational excellence, global market expansion, investments in product development and acquisitions — is expected to have continued to aid its performance in the fourth quarter. Moreover, fourth-quarter results are expected to reflect AMETEK Growth Model’s momentum.

Further, growing research and development spending, and strengthening of engineering initiatives are expected to have driven its organic growth in the soon-to-be-reported quarter.

The company’s focus on strong cash flow generation is anticipated to have aided capital deployment activities in the quarter, including acquisitions and share repurchases.

Further, positive contributions from strategic acquisitions are likely to have aided its segmental performance.

Sales for the Electronic Instruments Group segment are expected to have benefited from acquisitions of Motec, Forza, Telular and Spectro Scientific. Further, the strengthening of process businesses, especially the Materials Analysis business, is likely to have contributed to the segment’s top line in the quarter under review. Additionally, solid momentum in the Aerospace business is expected to have aided the company. The Zacks Consensus Estimate for the segment’s revenues is pegged at $889 million, indicating 8.9% year-over-year.

Sales for the Electromechanical Group segment are likely to have benefited from solid momentum across the company’s engineered materials business. However, foreign currency headwinds and continued slowdown in the Automation business could have affected this segment. The Zacks Consensus Estimate for revenues for this segment is pegged at $451 million, indicating 2.2% year-over-year decline.

However, the imposition of tariffs as a result of the U.S.-China trade war is anticipated to have negatively impacted AMETEK’s fourth-quarter performance.

What Our Model Says

Our proven model predicts an earnings beat for AMETEK this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AMETEK has an Earnings ESP of +0.14% and a Zacks Rank #3.

Other Stocks to Consider

Here are a few other stocks, which, per our model, also have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Advanced Energy Industries, Inc. AEIS has an Earnings ESP of +10.80% and a Zacks Rank #1.

Microchip Technology Incorporated MCHP has an Earnings ESP of +1.33% and a Zacks Rank of 1.

Applied Optoelectronics, Inc AAOI has an Earnings ESP of +8.12% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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