WF vs. BEN: Which Stock Should Value Investors Buy Now?
We issued an updated research report on IDEX Corporation IEX on Jun 29.
This machinery company, with approximately $10.5 billion market capitalization, currently carries a Zacks Rank #2 (Buy). Its earnings are projected to grow 11% in the next three to five years.
Let’s delve deeper and discuss why investors should consider adding IDEX’s stock to their portfolio.
Financial & Share Price Performances, Earnings Estimate Revision: IDEX’s financial performance has remained better than expected for quite some time now. Notably, its average earnings surprise for the last four quarters was a positive 3.12%. This average includes the impact of 4.03% earnings beat recorded in the first quarter of 2018.
We believe that solid financial results have been one of the reasons for the company’s stock price rally of 3.4% year to date. This return comfortably outperformed 9.8% decline recorded by the industry.
The company’s Zack Consensus Estimate is currently pegged at $5.18 for 2018 and $5.63 for 2019, reflecting year-over-year growth of 20.2% for 2018 and 8.6% for 2019. Estimates for the second quarter of 2018 are $1.31, representing growth of 21.3% over the year-ago quarter.
Also, the stock has an Earnings ESP of +0.57% for the second quarter and +0.41% for 2018. A combination of positive Earnings ESP for the second quarter and a Zacks Rank #2 indicates a high probability of the company recording positive earnings surprise in the quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Dividend Payments: IDEX is an ardent believer in rewarding shareholders handsomely, especially through dividend payments. Over the last five years, its annual dividend paid has increased 62.9%, from 89 cents in 2013 to $1.45 in 2017. Likewise, its payout rate grew from 29% in 2013 to 33.6% in 2017.
In the first quarter of 2018, the company used $28.9 million in cash for paying dividends. In April this year, the company hiked its quarterly dividend rate by 16%.
Acquisitions: Another interesting aspect about IDEX is its acquisitive nature. Over time, the company has solidified its product portfolio and leveraged business opportunities through the addition of assets. Here, the buyout of thinXXS Microtechnology AG in December 2017 is worth mentioning. This acquisition has strengthened the company’s CiDRA Precision Services business as well as added more vigor to its microfluidic and nanofluidic capabilities.
Moreover, in June 2018, the company acquired the intellectual property assets of Phantom Controls. The acquired assets will be integrated with the company’s Fire & Safety/Diversified Products segment and complement the existing water-flow offerings of its Akron Brass, Hale Products and other Class 1 Electronics brands.
Solid Growth Prospects in the Near Term: Strengthening organic growth, favorable global macroeconomic environment and a disciplined capital-deployment policy are a few factors that will drive IDEX’s growth in the quarters ahead. Solid growth in orders is further anticipated to aid the company’s results in 2018. Earnings in the year are predicted to be $5.05-$5.20 per share, above the previous projection of $4.90-$5.10. Organic sales growth is expected to be 5-6%.
Other Stocks to Consider
Some other top-ranked stocks worth considering in the industry are Twin Disc, Incorporated TWIN, Kadant Inc. KAI and Altra Industrial Motion Corp. AIMC. While both Twin Disc and Kadant sport a Zacks Rank #1 (Strong Buy), Altra Industrial Motion carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last 60 days, earnings estimates for each of these stocks have improved for the current year. Also, average positive earnings surprise for the last four quarters has been 250.43% for Twin Disc, 15.50% for Kadant and 5.06% for Altra Industrial Motion.
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