Category: AME

Shares of Ametek (AME Quick QuoteAME – Free Report) have been strong performers lately, with the stock up 7.1% over the past month. The stock hit a new 52-week high of $148.28 in the previous session. Ametek has gained 5.8% since the start of the year compared to the 27.3% move for the Zacks Computer and Technology sector and the 3.6% return for the Zacks Electronics – Testing Equipment industry.

What’s Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn’t missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 2, 2023, Ametek reported EPS of $1.49 versus consensus estimate of $1.41 while it beat the consensus revenue estimate by 4.48%.

For the current fiscal year, Ametek is expected to post earnings of $6.11 per share on $6.66 billion in revenues. This represents a 7.57% change in EPS on an 8.3% change in revenues. For the next fiscal year, the company is expected to earn $6.43 per share on $6.89 billion in revenues. This represents a year-over-year change of 5.25% and 3.38%, respectively.

Valuation Metrics

Ametek may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Ametek has a Value Score of C. The stock’s Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 24.2X current fiscal year EPS estimates, which is not in-line with the peer industry average of 24.2X. On a trailing cash flow basis, the stock currently trades at 20.8X versus its peer group’s average of 20.3X. Additionally, the stock has a PEG ratio of 2.7. This isn’t enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Ametek currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Ametek fits the bill. Thus, it seems as though Ametek shares could have a bit more room to run in the near term.

For the quarter ended December 2022, Ametek (AME Quick QuoteAME – Free Report) reported revenue of $1.63 billion, up 8.1% over the same period last year. EPS came in at $1.52, compared to $1.37 in the year-ago quarter.

The reported revenue compares to the Zacks Consensus Estimate of $1.58 billion, representing a surprise of +2.63%. The company delivered an EPS surprise of +3.4%, with the consensus EPS estimate being $1.47.

While investors closely watch year-over-year changes in headline numbers — revenue and earnings — and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company’s underlying performance.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock’s price performance.

Here is how Ametek performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Net sales-Electronic Instruments: $1.16 billion compared to the $1.11 billion average estimate based on three analysts. The reported number represents a change of +9.7% year over year.
• Net sales-Electro mechanical: $466.45 million versus $469.84 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +4.4% change.
• Operating income -Electromechanical: $114.55 million versus the three-analyst average estimate of $117.54 million.
• Operating income -Electronic Instruments: $307.13 million versus $290.93 million estimated by three analysts on average.

View all Key Company Metrics for Ametek here>>>

Shares of Ametek have returned +3.1% over the past month versus the Zacks S&P 500 composite’s +7.4% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

Ametek (AME Quick QuoteAME – Free Report) came out with quarterly earnings of $1.52 per share, beating the Zacks Consensus Estimate of $1.47 per share. This compares to earnings of $1.37 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 3.40%. A quarter ago, it was expected that this maker of electronic instruments and electromechanical devices would post earnings of $1.37 per share when it actually produced earnings of $1.45, delivering a surprise of 5.84%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Ametek, which belongs to the Zacks Electronics – Testing Equipment industry, posted revenues of $1.63 billion for the quarter ended December 2022, surpassing the Zacks Consensus Estimate by 2.63%. This compares to year-ago revenues of $1.5 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

Ametek shares have added about 3.9% since the beginning of the year versus the S&P 500’s gain of 7.3%.

What’s Next for Ametek?

While Ametek has underperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Ametek: mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.33 on $1.52 billion in revenues for the coming quarter and $5.85 on $6.39 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics – Testing Equipment is currently in the bottom 22% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Itron (ITRI Quick QuoteITRI – Free Report) , has yet to report results for the quarter ended December 2022. The results are expected to be released on February 27.

This energy and water meter company is expected to post quarterly earnings of $0.09 per share in its upcoming report, which represents a year-over-year change of -88%. The consensus EPS estimate for the quarter has been revised 22.8% lower over the last 30 days to the current level.

Itron’s revenues are expected to be $437.64 million, down 9.9% from the year-ago quarter.

Momentum investing is all about the idea of following a stock’s recent trend, which can be in either direction. In the ‘long’ context, investors will essentially be “buying high, but hoping to sell even higher.” And for investors following this methodology, taking advantage of trends in a stock’s price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Ametek (AME Quick QuoteAME – Free Report) , which currently has a Momentum Style Score of B. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings estimate revisions.

It’s also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Ametek currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here >>>

Set to Beat the Market?

Let’s discuss some of the components of the Momentum Style Score for AME that show why this maker of electronic instruments and electromechanical devices shows promise as a solid momentum pick.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It is also useful to compare a security to its industry, as this can help investors pinpoint the top companies in a particular area.

For AME, shares are up 2.04% over the past week while the Zacks Electronics – Testing Equipment industry is up 1.75% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 9.44% compares favorably with the industry’s 8.07% performance as well.

While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of Ametek have increased 11.44% over the past quarter, and have gained 75.2% in the last year. In comparison, the S&P 500 has only moved 11.04% and 51.89%, respectively.

Investors should also pay attention to AME’s average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. AME is currently averaging 1,000,414 shares for the last 20 days.

Earnings Outlook

The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock’s price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with AME.

Over the past two months, 3 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost AME’s consensus estimate, increasing from $4.28 to $4.34 in the past 60 days. Looking at the next fiscal year, 4 estimates have moved upwards while there have been no downward revisions in the same time period.

Bottom Line

Given these factors, it shouldn’t be surprising that AME is a #2 (Buy) stock and boasts a Momentum Score of B. If you’re looking for a fresh pick that’s set to soar in the near-term, make sure to keep Ametek on your short list.

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

A month has gone by since the last earnings report for Ametek (AME Quick QuoteAME – Free Report) . Shares have added about 4.4% in that time frame, outperforming the S&P 500.

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

AMETEK Beats Q4 Earnings Estimates

AMETEK has reported fourth-quarter 2020 adjusted earnings of $1.08 per share, which beat the Zacks Consensus Estimate by 4.8%.

Further, the bottom line remained flat on a year-over-year basis and improved 6.9% sequentially.

Net sales of $1.19 billion missed the Zacks Consensus Estimate of $1.2 billion. Notably, the top line rose 6.4% from the previous quarter but declined 8% year over year.

Disruptions caused by the COVID-19 pandemic led to a decline in the company’s top line. Moreover, sluggishness in the Electronic Instruments Group (“EIG”) and Electromechanical Group(“EMG”) segments remained a concern.

Nevertheless, the company delivered a strong operational performance in the fourth quarter.

AMETEK’s proper execution of the four core growth strategies — operational excellence, global market expansion, investments in product development and acquisitions —are expected to continue aiding financial growth in the near term and the long haul. Moreover, the AMETEK Growth Model is likely to continue driving the company’s business performance.

Segments in Detail

EIG (68.3% of total sales): AMETEK generated sales of $819.4 million from this segment, reflecting a decline of 7% from the year-ago quarter. This can primarily be attributed to the coronavirus pandemic. Nevertheless, the segment delivered solid operating performance during the reported quarter.

EMG (31.7% of sales): The segment generated $379.5 million of sales in the fourth quarter, which declined 11% on a year-over-year basis. The coronavirus-induced headwinds were major negatives. Further, the Reading Alloys divestiture impacted the top line negatively. Nevertheless, the segment delivered strong operational results.

Operating Details

For the fourth quarter, operating expenses were $900.8million, down 10.6% year over year. Further, the figure contracted 210 basis points (bps) from the year-ago quarter as a percentage of net sales to 75.1%.

Consequently, operating margin was 24.9%, which expanded 210 bps from the year-ago reported figure.

Further, operating margin for EIG expanded 270 bps year over year to 28.8% and the same for EMG expanded 110 bps from the year-ago quarter to 21%.

Balance Sheet & Cash Flow

As of Dec 31, 2020, cash and cash equivalents were $1.2 billion, down from $1.3 billion as of Sep 30, 2020.

Further, inventories amounted to $559.2 million at the end of the fourth quarter compared with $584.7 million at the end of the prior quarter.

Long-term debt was $2.28 billion in the reported quarter, down from $2.29 billion in the prior quarter.

The company generated $385.9 million of cash from operation in the fourth quarter compared with $309.7 million in the previous quarter.

Further, AMETEK generated free cash flow of $348.9 million in the reported quarter.

Guidance

For first-quarter 2021, the company expects a sales decline of low to mid-single digits on a year-over-year basis.

AMETEK expects adjusted earnings of 97 cents to $1.02 per share.

For 2021, the company expects a sales increase of mid-single digits on a year-over-year basis.

Adjusted earnings are anticipated to be $4.18-$4.30 per diluted share, suggesting growth of 6-9% from 2020.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Ametek has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ametek has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

AMETEK, Inc. (AME Quick QuoteAME – Free Report) is scheduled to report fourth-quarter 2020 results on Feb 4.

For the fourth quarter, the company expects a sales decline in high-single digits on a year-over-year basis. The Zacks Consensus Estimate for the same is pegged at $1.2 billion, suggesting a decline of 7.8% from the year-ago quarter’s reported figure.

Further, the company expects adjusted earnings of $1.00-$1.04 per diluted share. The Zacks Consensus Estimate for earnings stands at $1.03 per share, indicating a slump of 4.6% from the year-ago quarter’s reported number.

The company beat estimates in each of the trailing four quarters, the surprise being 8.52%, on average.

Factors to Note

The company’s proper execution of its core growth strategies —includingoperational excellence, global market expansion, investments in product development and acquisitions —is expected to have continued aiding its performance in the fourth quarter.

Moreover, fourth-quarter results are expected to reflect the AMETEK Growth Model’s momentum.

Further, growing research and development spending, and strengthening of engineering initiatives are expected to have driven its organic growth in the soon-to-be-reported quarter.

The company’s focus on strong cash flow generation is anticipated to have continued aiding capital deployment activities, including acquisitions and share repurchases, in the quarter.

Further, positive contributions from acquisitions are likely to have aided its segmental performance.

Sales for the Electronic Instruments Group (“EIG”) segment are expected to have benefited from acquisitions of Gatan, IntelliPower, Motec, Forza, Telular and Spectro Scientific. Further, the strengthening of process businesses, especially the Materials Analysis business, is likely to have contributed to the segment’s topline in the quarter under review.

Sales for the Electromechanical Group (“EMG”) segment are likely to have benefited from the Pacific Design Technologies and FMH Aerospace buyout in the to-be-reported quarter. Further, solid momentum across the company’s engineered materials business is expected to have contributed to the topline of the segment in the quarter under review.

However, widespread disruptions induced by the ongoing coronavirus pandemic are anticipated to have remained headwinds for both segments, which, in turn, are likely to get reflected in the top line of the companyfor the fourth quarter.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for AMETEK 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AMETEK has an Earnings ESP of 0.00% and a Zacks Rank #3.

Stocks to Consider

Here are some companies, which have the right combination of elements to post an earnings beat this quarter:

Vishay Intertechnology, Inc. (VSH Quick QuoteVSH – Free Report) has an Earnings ESP of +4.82% and holds a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Synaptics Incorporated (SYNA Quick QuoteSYNA – Free Report) has an Earnings ESP of +0.42% and currently carries a Zacks Rank of 2.

CDW Corporation (CDW Quick QuoteCDW – Free Report) has an Earnings ESP of +6.74% and a Zacks Rank of 2.

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