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Here's Why Hold Strategy is Apt for IDEX (IEX) Stock Now
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IDEX Corporation (IEX - Free Report) has been benefiting from the Fire & Safety/Diversified Products (FSDP) segment, Fluid & Metering Technologies (FMT) segment and accretive acquisitions despite weakness in the Health & Science Technologies unit, the rising cost of sales and forex woes.
Let us discuss the factors why investors should retain the stock for the time being.
Growth Catalysts
Business Strength: IEX’s FSDP segment is being driven by strong momentum in the fire and safety and Band-It businesses. In the fourth quarter of 2023, the segmental adjusted EBITDA margin increased 160 bps due to strong price cost performance, operational productivity and favorable volume leverage. Strength in the industrial businesses and strong price capture on slightly higher volumes have been aiding the FMT segment’s performance.
Accretive Acquisition: The company’s expansion initiative is expected to drive growth. In December 2023, the company acquired advanced material science solutions provider STC Material Solutions, which expanded IEX’s growing expertise in material sciences and offered significant opportunities to collaborate with other IDEX critical components businesses on comprehensive solution sets for customers. The acquisition of Iridian Spectral (May 2023) expanded IDEX’s wide array of optical technology offerings. Iridian is part of IDEX Optical Technologies within the Health & Science Technology segment.
In November 2022, the company completed the acquisition of Muon Group, expanding its growing platform of precision technology business within the Health & Science Technologies segment. Commercial synergy potential from the combined entities is expected to boost offerings for new and existing customers. Notably, acquired assets boosted the company’s sales by 3% in the fourth quarter of 2023. IDEX anticipates buyout synergies to boost sales by approximately 1% in 2024.
Rewards to Shareholders: The company continues to increase shareholders’ value through dividend payments. In 2023, IDEX’s dividend payments totaled $190.7 million (up 7.5% year over year). The current quarterly dividend rate is 64 cents per share (a hike of 7% was announced in May 2023).
In light of the above-mentioned positives, we believe, investors should retain IEX stock for now, as suggested by its current Zacks Rank #3 (Hold). In the past year, the stock has increased 0.7%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
AIT’s earnings estimates have remained steady for fiscal 2024 in the past 60 days. Shares of Applied Industrial have risen 30.8% in the past year.
AZZ Inc. (AZZ - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of approximately 37.5%, on average.
In the past 60 days, estimates for AZZ’s earnings have increased 4.9% for fiscal 2024. The stock has soared 71.9% in the past year.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank of 2. BRC’s earnings surprise in the last four quarters was 7%, on average.
In the past 60 days, estimates for Brady’s fiscal 2024 earnings have remained steady. The stock has gained 17.5% in the past year.
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Here's Why Hold Strategy is Apt for IDEX (IEX) Stock Now
IDEX Corporation (IEX - Free Report) has been benefiting from the Fire & Safety/Diversified Products (FSDP) segment, Fluid & Metering Technologies (FMT) segment and accretive acquisitions despite weakness in the Health & Science Technologies unit, the rising cost of sales and forex woes.
Let us discuss the factors why investors should retain the stock for the time being.
Growth Catalysts
Business Strength: IEX’s FSDP segment is being driven by strong momentum in the fire and safety and Band-It businesses. In the fourth quarter of 2023, the segmental adjusted EBITDA margin increased 160 bps due to strong price cost performance, operational productivity and favorable volume leverage. Strength in the industrial businesses and strong price capture on slightly higher volumes have been aiding the FMT segment’s performance.
Accretive Acquisition: The company’s expansion initiative is expected to drive growth. In December 2023, the company acquired advanced material science solutions provider STC Material Solutions, which expanded IEX’s growing expertise in material sciences and offered significant opportunities to collaborate with other IDEX critical components businesses on comprehensive solution sets for customers. The acquisition of Iridian Spectral (May 2023) expanded IDEX’s wide array of optical technology offerings. Iridian is part of IDEX Optical Technologies within the Health & Science Technology segment.
In November 2022, the company completed the acquisition of Muon Group, expanding its growing platform of precision technology business within the Health & Science Technologies segment. Commercial synergy potential from the combined entities is expected to boost offerings for new and existing customers. Notably, acquired assets boosted the company’s sales by 3% in the fourth quarter of 2023. IDEX anticipates buyout synergies to boost sales by approximately 1% in 2024.
Rewards to Shareholders: The company continues to increase shareholders’ value through dividend payments. In 2023, IDEX’s dividend payments totaled $190.7 million (up 7.5% year over year). The current quarterly dividend rate is 64 cents per share (a hike of 7% was announced in May 2023).
In light of the above-mentioned positives, we believe, investors should retain IEX stock for now, as suggested by its current Zacks Rank #3 (Hold). In the past year, the stock has increased 0.7%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2 (Buy) and a trailing four-quarter earnings surprise of 10.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AIT’s earnings estimates have remained steady for fiscal 2024 in the past 60 days. Shares of Applied Industrial have risen 30.8% in the past year.
AZZ Inc. (AZZ - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of approximately 37.5%, on average.
In the past 60 days, estimates for AZZ’s earnings have increased 4.9% for fiscal 2024. The stock has soared 71.9% in the past year.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank of 2. BRC’s earnings surprise in the last four quarters was 7%, on average.
In the past 60 days, estimates for Brady’s fiscal 2024 earnings have remained steady. The stock has gained 17.5% in the past year.