It has been about a month since the last earnings report for Idex (IEX Quick QuoteIEX - Free Report) . Shares have added about 6.6% in that time frame, outperforming the S&P 500.

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

IDEX Q4 Earnings Surpass Estimates, Revenues Down Y/Y

IDEX’s fourth-quarter 2023 adjusted earnings of $1.83 per share surpassed the Zacks Consensus Estimate of adjusted earnings of $1.78. On a year-over-year basis, the bottom line decreased approximately 9% from the year-ago quarter’s figure of earnings of $2.01 per share due to the higher effective tax rate. It also exceeded management’s projection of $1.74-$1.79 per share.

Revenue Details

In the quarter under review, IDEX’s net sales of $788.9 million outperformed the Zacks Consensus Estimate of $769 million. However, the top line decreased 3% year over year. Organic sales in the quarter decreased 6% year over year, lower than the 8-9% decline expected by the company. Acquisitions/divestitures boosted sales by 3%.

IEX reports net sales under three business segments, the results of which are discussed below:

Revenues from the Fluid & Metering Technologies segment totaled $299.1 million, increasing 3.9% year over year. Organic sales were up 3%. Foreign currency translation left a positive impact of 1%.

Revenues from the Health & Science Technologies segment totaled $312.7 million, indicating a year-over-year decline of 11%. Organic sales in the quarter declined 19% year over year, while acquired assets boosted sales by 7%. Foreign currency translation left a positive impact of 1%.

Revenues from the Fire & Safety/Diversified Products segment totaled $179 million, rising 5% year over year. The results were aided by a 3% increase in organic sales. Foreign currency translation left a positive impact of 2%.

Margin Profile

In the quarter under review, IDEX’s cost of sales decreased 2.8% year over year to $452.1 million. The gross profit was $336.8 million, down 2.6% year over year, while the gross margin was 42.7% compared with 42.6% reported in the year-ago quarter.

Selling, general and administrative expenses increased 2.7% year over year to $173.6 million. Adjusted EBITDA in the quarter under review decreased 7% year over year to $203.6 million. The adjusted EBITDA margin decreased 120 bps year over year to 25.8%.

The operating income was $160.5 million, down 8.3% year over year, whereas the margin was 20.3%, down 130 bps year over year. Interest expenses in the quarter decreased 4.1% year over year to $11.6 million.

Balance Sheet and Cash Flow

While exiting the fourth quarter, IDEX’s cash and cash equivalents were $534.3 million compared with $430.2 million recorded at the end of fourth-quarter 2022. Long-term borrowings were $1.33 billion compared with $1.47 billion recorded at the end of fourth-quarter 2022.

In 2023, IDEX generated net cash of $716.7 million from operating activities, increasing 28.6% from the year-ago period. Capital used for purchasing property, plant and equipment was $89.9 million compared with $68 million in 2022. In 2023, free cash flow was $626.8 million, up 28% year over year.

IEX paid out dividends totaling $190.7 million in 2023, up 7.5% year over year. The company repurchased common stock worth $24.2 million in the quarter.

It spent $311.8 million on acquisitions in 2023.

Outlook

For first-quarter 2024, IDEX anticipates adjusted earnings to be $1.70-$1.75 per share.

On a GAAP basis, IEX predicts earnings to be $1.45-$1.50 per share and a 6-7% decline in organic sales from the respective year-ago readings.

For 2024, IDEX anticipates adjusted earnings to be $8.15-$8.45 per share. The figure represents an increase from $8.22 per share reported in 2023. On a GAAP basis, earnings are predicted to be $7.15-$7.45 per share.

Organic sales are predicted to decline 0-2% in 2024.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -16.29% due to these changes.

VGM Scores

Currently, Idex has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, 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, Idex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Idex is part of the Zacks Manufacturing - General Industrial industry. Over the past month, Graco Inc. (GGG Quick QuoteGGG - Free Report) , a stock from the same industry, has gained 5.6%. The company reported its results for the quarter ended December 2023 more than a month ago.

Graco Inc. reported revenues of $566.64 million in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $0.80 for the same period compares with $0.73 a year ago.

For the current quarter, Graco Inc. is expected to post earnings of $0.73 per share, indicating a change of -1.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.9% over the last 30 days.

Graco Inc. has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.