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Investors seeking exposure in the manufacturing industry might find IDEX Corporation IEX an attractive option. Healthy financial performance and solid growth opportunities along with sound fundamentals raise the stock’s attractiveness.
The company currently has a market capitalization of $17 billion and a Zacks Rank #2 (Buy). It engages in providing products and solutions related to health and science technologies as well as fluid and metering technologies. It also provides fire, safety and other products.
The company belongs to the Zacks Manufacturing - General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is among the top 41% (with the rank of 103) of more than 250 Zacks industries.
Year to date, the company’s shares have gained 12.5% compared with the industry’s growth of 8.6%. Notably, the S&P 500 expanded 20.3%, whereas the sector advanced 15.6% in the same timeframe.
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Below we discussed why IDEX is a worthy investment option.
Performance and Projections: The company’s results for second-quarter 2021 were impressive, with earnings increasing 46.4% from the year-ago quarter. The results benefited from a 22.2% increase in revenues and an improvement in margins.
In the quarters ahead, the company is poised to benefit from its solid product offerings, exposure in various end markets, and investments to enhance productivity and digitization. Strengthening end-market businesses along with healthy orders and pricing actions are anticipated to be beneficial.
IDEX anticipates earnings of $6.26-$6.36 in 2021, higher than $6.05-$6.20 mentioned earlier. Notably, it recorded $5.19 in 2020. It predicts earnings of $1.57-$1.61 for the third quarter of 2021.
For 2021, the company anticipates year-over-year organic sales growth of 11-12%, higher than 9-10% mentioned previously.
Diversified Operations & Buyouts: The company operates in various markets, including energy, fire and rescue, life science, water & wastewater, chemical, agricultural, food, and general industrial markets. Benefits in one or more markets help in offsetting weakness in other markets.
For 2021, IDEX anticipates healthy business in life sciences, food/pharma, semiconductor, industrial, automotive and analytical instrumentation markets to aid its Health & Science Technologies segment. The Fire & Safety/Diversified Products segment are likely to benefit from strength in automotive, industrial/other and dispensing markets. Also, healthy growth in industrial, agriculture and water markets is a tailwind for the Fluid & Metering Technologies segment.
In addition to strengthening markets, IDEX is gaining from its buyout activities. In second-quarter 2021, the company’s acquired assets boosted the quarter’s sales by 1%. In March 2021, IDEX acquired Abel Pumps L.P., while it added Airtech Group as well as US Valve Corporation and other entities to its portfolio in June. Airtech is predicted to boost the company’s earnings by 6 cents in the second half of 2021.
Shareholders’ Rewards: IDEX believes in rewarding shareholders with dividend payouts. In the first half of 2021, the company paid out $79.2 million as dividends to its shareholders. The quarterly dividend rate was hiked by 8% to 54 cents per share in May 2021.
It refrained from repurchasing shares in the first half of 2021 but bought back shares worth $110.3 million in the year-ago comparable period. It has authorization left to buy back $712 million shares at the end of June 2021.
Earnings Estimate Revisions: The company’s earnings estimates have increased in the past 30 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $1.61 for the third quarter of 2021, reflecting an increase of 7.3% from the 30-day-ago figure.
IDEX Corporation Price and Consensus
IDEX Corporation price-consensus-chart | IDEX Corporation Quote
Also, earnings estimates are pegged at $6.34 for 2021 and $6.98 for 2022, suggesting increases of 3.6% and 4% from the 30-day-ago figures, respectively.
Other Key Picks
Some other top-ranked stocks in the industry are Kadant Inc. KAI, Altra Industrial Motion Corp. AIMC and Dover Corporation DOV. While Kadant currently sports a Zacks Rank #1 (Strong Buy), both Altra Industrial and Dover carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for the companies improved for the current year. Further, the earnings surprise for the last reported quarter was 33.11% for Kadant, 8.54% for Altra Industrial and 11.96% for Dover.
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