On Mar 24, Zacks Investment Research upgraded industrial goods manufacturer IDEX Corporation IEX to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell) primarily on the back of improving fundamentals. IDEX shares are currently trading at a forward P/E of 20.8x with long-term earnings growth expectation of 14.7%, which reflects its inherent growth potential.
Why the Upgrade?
IDEX’s products are sold in various niche markets to a wide range of industries throughout the world. The company is currently striving to expand its businesses in the emerging markets by focusing on organic growth. IDEX also aims to increase its market exposure and improve sales mix by continually developing new products. With a flexible yet disciplined focus on cost and productivity, IDEX expects to successfully tap newer markets to augment its revenue. Acquisitions over time have been IDEX’s most favored mode for penetrating unexplored markets. These acquisitions further expand its geographic reach, fill technology gaps and strengthen foothold in the existing markets while expanding its product lines.
At the same time, IDEX continues to increase quarterly dividends at periodic intervals and remains active on share repurchases. The capital investments are an integral part of the company’s strategy to maximize shareholders value. The company intends to optimize its cost structure, increase its competitiveness and reallocate resources to improve profitability. IDEX undertook about $14 million of cost actions, which are expected to deliver $15 million in additional profits in 2015. In its Fire business, IDEX intends to target new markets for fire suppression trailers in the power generation market. The long-term growth prospects of the company, therefore, appear to be quite encouraging.
In order to better serve its customers, IDEX has sharpened its focus on the market segments that offer the greatest opportunity for long-term growth and on the critical few customers who will drive that growth. The company has consolidated similar product lines and has built definite product-line strategies to drive growth and profitability. Moving forward, the company is diligently focusing on developing talented global teams that are committed to the IDEX Operating Model for an effective execution of its operational plans. IDEX also remains bullish about its top and bottom-line growth and expects its 2015 earnings in the range of $3.65 to $3.75 per share. The Zacks Consensus Estimate for 2015 is currently pegged at $3.68.
Other Stocks to Consider
Other stocks that look promising in the industry and are worth a look include Compass Diversified Holdings CODI, AO Smith Corp. AOS and ESCO Technologies Inc. ESE, each carrying a Zacks Rank #2 (Buy).
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