Examining IDEX Corporation’s (NYSE:IEX) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess IEX’s latest performance announced on 31 December 2017 and weigh these figures against its longer term trend and industry movements. View our latest analysis for IDEX
Could IEX beat the long-term trend and outperform its industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess various companies on a more comparable basis, using the most relevant data points. For IDEX, its most recent bottom-line (trailing twelve month) is US$337.26M, which, relative to the prior year’s figure, has increased by 24.40%. Since these figures may be somewhat short-term thinking, I’ve determined an annualized five-year value for IEX’s earnings, which stands at US$225.60M This means on average, IDEX has been able to gradually improve its net income over the past few years as well.
How has it been able to do this? Let’s take a look at whether it is only because of an industry uplift, or if IDEX has seen some company-specific growth. Over the last few years, IDEX expanded its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 21.29% over the past year, and a more subdued 3.88% over the previous five years. This suggests that any uplift the industry is profiting from, IDEX is capable of leveraging this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research IDEX to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for IEX’s future growth? Take a look at our free research report of analyst consensus for IEX’s outlook.
- 2. Financial Health: Is IEX’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.