Why the Earnings Surprise Streak Could Continue for Ross Stores (ROST)
IDEX Corporation IEX reported strong first-quarter 2018 results with all-time high revenues, operating income and earnings driven by healthy organic growth and diligent execution of operational plans. GAAP earnings for the reported quarter were $99 million or $1.27 per share compared with $75.9 million or 99 cents per share in the year-earlier quarter. The year-over-year improvement was primarily attributable to top-line growth. Excluding restructuring and other non-recurring items, adjusted earnings for the reported quarter were $1.29 per share, which beat the Zacks Consensus Estimate of $1.24.
IDEX Corporation Price, Consensus and EPS Surprise
IDEX Corporation Price, Consensus and EPS Surprise | IDEX Corporation Quote
Net sales in the reported quarter came in at $612.3 million compared with $553.6 million in the year-ago quarter. Quarterly sales exceeded the Zacks Consensus Estimate of $601 million. The top-line increase was primarily attributable to organic growth of 7%. Investments in product innovations, business development and reallocation of resources led to growth in revenues across all segments of the company, which helped drive total revenues.
Net sales of Fluid & Metering Technologies (FMT) were $232.3 million compared with $216.8 million in the prior-year quarter primarily led by organic growth of 5% in the quarter. The company recorded impressive performance in its pump business with double-digit increase in both orders and sales year over year owing to improved oil prices.
Aggregate quarterly revenues from Health & Science Technologies (HST) came in at $221.1 million compared with $199.7 million in the year-ago quarter, driven by organic growth of 8% and solid IVD/BIO end markets.
Fire & Safety/Diversified Products (FSDP) revenues were $159.2 million, up from $137.4 million in the year-ago quarter with organic growth of 12%, new product launches and program wins.
Adjusted operating income for the reported quarter was $138.3 million compared with $120.5 million in the year-ago period with respective margins of 22.6% and 21.8%. The increase in adjusted operating income, despite rise in operating expenses, was primarily due to significant top-line growth. Adjusted EBITDA (earnings before interest, taxes depreciation and amortization) was $163.8 million with adjusted EBITDA margin of 26.8% compared with $141.5 million and 25.6%, respectively, in the year-ago period.
Adjusted operating income for FMT increased to $66.3 million from $59.4 million with respective margins of 28.5% and 27.4% on robust performance in industrial valve business in China and healthy pump sales.
Adjusted operating income of HST was $52.9 million compared with $45.3 million for respective margins of 23.9% and 22.7% on higher volume and productivity initiatives.
Adjusted operating profit of FSDP increased to $39.7 million from $32.7 million for margins of 24.9% and 23.8%, respectively, with solid project activities and strength in OEM business.
Balance Sheet and Cash Flow
IDEX exited the quarter with cash and cash equivalents of $413 million and long-term debt of $859.7 million. For the first three months of 2018, the company generated net cash of $71.7 million from its operating activities, down from $85 million recorded in the prior-year period. Free cash flow for the quarter was $61.7 million, down 18% owing to higher operating working capital.
IDEX is poised to gain from robust organic growth, disciplined capital deployment and a favorable global macroeconomic environment. With solid quarterly results and continued strength in order trajectory, management has increased its earlier guidance for 2018. Full-year adjusted earnings are currently anticipated to lie within the $5.05-$5.20 per share range, up from $4.90-$5.10 expected earlier on organic growth of 5-6%.
Zacks Rank & Other Stocks to Consider
IDEX currently carries a Zacks Rank #2 (Buy). Other stocks worth considering in the industry include Ingersoll-Rand Plc IR, Atlas Copco AB ATLKY and Altra Industrial Motion Corp. AIMC, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ingersoll-Rand has an expected long-term earnings growth rate of 10.5%. It has a positive earnings surprise history with an average of 3.9% in the trailing four quarters, beating estimates thrice.
Atlas Copco has an expected long-term earnings growth rate of 12.5%. It has a positive earnings surprise history with an average of 5.8% in the trailing four quarters, beating estimates twice.
Altra Industrial Motion Corp exceeded estimates thrice in the trailing four quarters with an average beat of 5.1%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ingersoll-Rand PLC (Ireland) (IR) : Free Stock Analysis Report
Atlas Copco AB (ATLKY) : Free Stock Analysis Report
Altra Industrial Motion Corp. (AIMC) : Free Stock Analysis Report
IDEX Corporation (IEX) : Free Stock Analysis Report
To read this article on Zacks.com click here.