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IDEX (IEX) to Benefit From End-Market Strength & Buyouts

·3-min read

IDEX Corporation IEX currently boasts robust prospects on strength in its end markets, solid product portfolio, acquired assets and a sound capital-deployment strategy.

The Zacks Rank #2 (Buy) company has a market capitalization of $13.5 billion. In the past month, it has lost 5.6% compared with the industry’s decline of 7.3%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Let’s delve into the factors that make investment in the company a smart choice at the moment.

Business Strength: IDEX has been benefiting from strength in its industrial, semiconductor and life sciences end markets of late. Improvements in automotive, chemical and energy end markets have been proving beneficial as well. Growth in orders and backlog, along with the company’s effective pricing actions, is expected to drive its performance in the quarters ahead. For 2022, the company anticipates generating organic sales growth of 6-8% on a year-over-year basis.

Benefits From Acquisitions:  The company’s acquisition of KZValve (May 2022) is expected to boost fluid management solutions in its Banjo Corporation business. The buyout of Nexsight, LLC and its WinCan, Envirosight, MyTana and Pipeline Renewal Technologies businesses (March 2022) has been strengthening its position in the intelligent water technologies market. Also, its buyout of Airtech Group, US Valve Corporation and other entities strengthened its Health & Science Technology segment. It anticipates buyout synergies to boost sales by 6% for the second quarter and 4% for 2022.

Shareholder Friendly Policies: IDEX is focused on rewarding shareholders through dividend payouts and share buybacks. In first-quarter 2022, the company paid out dividends worth $41.4 million and repurchased shares worth $26.3 million. Also, in May 2022, it announced a hike of 11% in its quarterly dividend rate.

Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for its 2022 earnings has moved up from $7.45 to $7.69 on six upward estimate revisions against none downward. Further, the consensus estimate for its 2023 earnings has increased from $8.10 to $8.38 on six upward estimate revisions versus none downward.

Other Stocks to Consider

Some other top-ranked companies from the same space are discussed below:

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average.

AIT’s earnings estimates have increased 5.9% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have declined 7.2% in the past month.

RBC Bearings Incorporated ROLL is presently Zacks #1 Ranked. ROLL’s earnings surprise in the last four quarters was 3.4%, on average.

In the past 60 days, the stock’s earnings estimates have increased 9.7% for fiscal 2023 (ending March 2023). The same has increased 10.4% in the past month.

Nordson Corporation NDSN presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 4.5%, on average.

In the past 60 days, NDSN’s earnings estimates have increased 3% for 2022. The stock has declined 6.3% in the past month.

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