Idex (IEX) Down 3% Since Last Earnings Report: Can It Recover? – May 23, 2024

A month has passed since Idex’s last earnings report (IEX – Free Report). Shares have lost about 3% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Idex waiting for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the key drivers.

IDEX’s first-quarter earnings beat estimates, revenues declined YoY

IDEX’s first-quarter 2024 adjusted earnings of $1.88 per share topped the Zacks Consensus Estimate of $1.75. On a year-over-year basis, earnings declined approximately 10.1% compared to prior-year quarter earnings of $2.09 per share. However, this figure exceeded management’s forecast of $1.70-1.75 per share.

Revenue details

For the quarter under review, IDEX’s net sales of $800.5 million lagged the Zacks Consensus Estimate of $805 million. Revenue also declined 5.3% year-over-year. Organic sales were down 6% year-over-year this quarter. Acquisitions/divestitures increased sales by 1%.

IEX reports net sales across three business segments, the results of which are discussed below:

Revenues from the Fluids and Measurements Technology segment were $313.7 million, down 3% year-over-year. Organic sales decreased by 3%.

Health and Science Technology segment revenues were $310.1 million, down 12% year-over-year. Organic sales in the quarter were down 13% year-over-year, while acquired assets increased sales by 1%.

Fire and Diversified Products segment revenues were $178.0 million, up 2% year-over-year. The results were influenced by a 2% increase in organic sales.

Margin profile

During the quarter, IDEX’s cost of sales decreased 4.3% year-over-year to $443.1 million. Gross profit was $357.4 million, down 6.6% year-over-year, while gross margin was 45% compared to 45.2% reported in the year-ago quarter.

Selling, general and administrative expenses increased 2.9% year over year to $195.1 million. Adjusted EBITDA in the quarter under review decreased 9.4% year over year to $208.3 million. Adjusted EBITDA margin declined 120 basis points year-over-year to 26%.

Operating income was $161.2 million, down 16.2% year over year, while margin was 20.1%, down 260 basis points year over year. Interest expense for the quarter decreased 28.2% year-over-year to $9.4 million.

Balance sheet and cash flow

At the end of the first quarter, IDEX’s cash and cash equivalents were $616.3 million, compared to $534.3 million recorded at the end of the fourth quarter of 2023. Long-term debt was $1.32 billion, compared to $1.33 billion recorded at the end of the fourth quarter of 2023

In the first three months of 2024, IDEX generated net cash from operations of $156.6 million, an increase of 5.9% compared to the year-ago period. Capital used for the purchase of property, plant and equipment was USD 20 million, compared to USD 26.6 million in the first three months of 2023. In the first three months, free cash flow was USD 136.6 million, an increase of 12.6% year-on-year year.

IEX paid a total dividend of $48.5 million in the first three months of 2024, up 6.6% year-over-year.

Perspectives

IDEX projects second-quarter 2024 adjusted earnings per share of $2.00 to $2.05.

On a GAAP basis, IEX expects earnings per share to be $1.75-$1.80 and organic sales to decline 2-3% compared to prior-year corresponding readings.

IDEX projects 2024 adjusted earnings per share of $8.15 to $8.45. This number represents an increase from earnings of $8.22 per share reported in 2023. On a GAAP basis, earnings per share are expected to be $7.13 to $7.43.

Organic sales are expected to decline by 0-2% in 2024.

How have estimates changed since then?

Over the last month, investors have seen a downward trend in estimate revisions.

VGM results

Right now, Idex has a nice B growth score, a rating with the same momentum score. However, the stock is rated D for value, putting it in the bottom 40% for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Idex carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Idex belongs to the Zacks Manufacturing – General Industrial industry. Another product from the same industry, Crane (C.R – Free Report) has gained 3.2% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

Crane reported revenue of $565.3 million in the most recent quarter, representing a +10% year-over-year change. EPS of $1.22 in the same period compared to $1.25 a year ago.

For the current quarter, Crane is expected to report earnings per share of $1.22, which would represent a year-over-year change of +10.9%. Over the past 30 days, the Zacks Consensus Estimate has moved +5.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Crane. The stock also has a VGM Rating of F.

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