IDEX Corporation (IEX) recently delivered its sixth consecutive positive earnings surprise on strong sales growth and an expanding operating margin.
The company continues to see strength across each business segment as the global economic recovery gains traction. Management also revised its guidance higher following the strong third quarter. It is a Zacks #2 Rank (Buy) stock.
Company Description
IDEX Corp manufactures a broad range of fluid handling and industrial products. Sales for the third quarter of 2010 were divided as follows:
Fluid & Metering Technologies: 47%
Health & Science Technologies: 28%
Dispensing Equipment: 7%
Fire & Safety/Diverisified Products: 18%
EPS Up 28%
IDEX reported third quarter earnings per share of 50 cents, beating the Zacks Consensus Estimate by 3 cents. It was a 28% increase over the same quarter in 2009.
Total sales were up 16% year-over-year, driven by a 13% increase in orders. The Fluid & Metering division saw organic top-line growth of 13%, while the Health & Science segment soared 24%.
Meanwhile, the operating margin expanded from 15.2% in the third quarter of 2009 to 17.6%, leading to a 34.2% increase in operating income.
Raising Guidance
Management revised its guidance for 2010 EPS following the strong third quarter. The company now expects to earn between $1.95 and $1.97 per share, up from previous guidance of $1.85 to $1.90.
The Zacks Consensus Estimate for 2010 is within guidance at $1.96, representing a 28% increase over 2009 EPS. The 2011 is currently $2.23, equating to 14% growth.
Dividend
Since 2000, IEX has raised its dividend at a compound annual growth rate of 8.6%.
Its payout ratio is a very manageable 32%. It currently yields 1.5%.
Valuation
Shares are trading at 20.3x forward estimates, a slight premium to the industry average of 19.3x. Its price to book ratio of 2.4 is also a little higher than its peers at 2.3.
IDEX Corporation is headquartered in Northbrook, Illinois and has a market cap of $3.3 billion.
IDEX CORP (IEX): Free Stock Analysis Report
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