Will Increasing Expenses Dent IDEX's (IEX) Q3 Earnings?
IDEX Corporation IEX is scheduled to release third-quarter 2023 results on Oct 25, after market close.
The Zacks Consensus Estimate for the company’s third-quarter earnings has remained steady in the past 60 days. The company has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average beat being 3.5%.
Let's see how things are shaping up for IDEX this earnings season.
Factors to Note
IDEX’s Health & Science Technologies (HST) segment is reaping benefits from the Iridian Spectral acquisition (May 2023), which has expanded its wide array of optical technology offerings. However, we expect the HST segment’s revenues to decrease 4.3% year over year due to inventory destocking in the analytical instrumentation, life sciences, biopharma and semiconductor end markets. For the third quarter, we expect the unit’s operating income to decrease 27.2% from the year-ago reported figure.
The increasing cost of sales due to escalating raw material costs, and rising selling, general and administrative expenses due to higher employee-related costs and discretionary spending is likely to dent IEX’s bottom line in the to-be-reported quarter. For the quarter, we expect the company’s adjusted earnings to decline 12.1% from the year-ago reported number.
Given the company’s substantial international presence, adverse foreign currency movements are likely to dent its top line in the to-be-reported quarter. We expect the third-quarter revenues to decrease 4.1% from the year-ago period.
However, despite slowing industrial orders, strength in the water, energy, and chemical end markets is likely to support the Fluid & Metering Technologies segment in the to-be-reported quarter. Strong momentum in the fire and rescue businesses has been driving the Fire & Safety/Diversified Products segment.
IDEX Corporation Price and EPS Surprise
IDEX Corporation price-eps-surprise | IDEX Corporation Quote
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for IEX 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, which is not the case here, as elaborated below.
Earnings ESP: IDEX has an Earnings ESP of -0.44% as the Most Accurate Estimate is pegged at $1.88, which is lower than the Zacks Consensus Estimate of $1.89. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: IDEX presently carries a Zacks Rank of 3.
Highlights of Q2 Earnings
IDEX’s second-quarter 2023 adjusted earnings of $2.18 per share surpassed the Zacks Consensus Estimate of adjusted earnings of $2.12 per share. On a year-over-year basis, the bottom line increased 7.9% from the year-ago quarter’s figure of $2.02 per share. In the quarter under review, IDEX’s net sales of $846.2 million underperformed the consensus estimate of $847 million. However, the top line increased 6.3% year over year.
Stocks to Consider
Here are some companies within the broader Industrial Products sector, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.
Emerson Electric Co. EMR has an Earnings ESP of +0.12% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to release fourth-quarter fiscal 2023 (ended Sep 30, 2023) results on Oct 30. Emerson’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters while missing in one, the average beat being 7.4%.
Ingersoll Rand Inc. IR has an Earnings ESP of +1.00% and a Zacks Rank of 3. The company is slated to release third-quarter 2023 results on Nov 1.
Ingersoll Rand’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 14.9%.
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Emerson Electric Co. (EMR) : Free Stock Analysis Report
Ingersoll Rand Inc. (IR) : Free Stock Analysis Report
IDEX Corporation (IEX) : Free Stock Analysis Report
