A month has gone by since the last earnings report for Idex (IEX Quick QuoteIEX - Free Report) . Shares have added about 4.5% 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 drivers.

IDEX Q2 Earnings Top Estimates, Sales Miss, '24 View Down

IDEX’s second-quarter 2024 adjusted earnings of $2.06 per share surpassed the Zacks Consensus Estimate of $2.04. The bottom line decreased approximately 6% from the year-ago quarter’s earnings of $2.18 per share. However, it exceeded management’s projection of $2.00-$2.05 per share.

Revenue Details

IDEX’s net sales of $807.2 million missed the Zacks Consensus Estimate of $831 million.  The top line also decreased 5% year over year. Organic sales decreased 4% year over year. Foreign currency translation had a negative impact on sales by 1%.

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

Net sales from the Fluid & Metering Technologies segment totaled $319.4 million, down 2% year over year. Our estimate for segmental net sales was $327 million. While organic sales were flat year over, acquisition/divestitures and foreign currency translation each had a negative impact of 1% on sales.

Net sales from the Health & Science Technologies segment totaled $303.8 million, indicating a year-over-year decline of 11%. Our estimate for segmental net sales was $321 million. Organic sales declined 11% year over year.

Net sales from the Fire & Safety/Diversified Products segment totaled $185.4 million, which increased marginally year over year. Our estimate for segmental net sales was $185 million. Organic sales increased 1% on a year-over-year basis while foreign currency translation hurt sales by 1%.

Margin Profile

IDEX’s cost of sales decreased 5.9% year over year to $440.4 million. The gross profit was $366.8 million, down 3% year over year. The gross margin was 45.4% compared with 44.7% in the year-ago quarter.

Selling, general and administrative expenses increased 4.9% year over year to $182.8 million. Adjusted EBITDA decreased 6.9% year over year to $224.2 million. The adjusted EBITDA margin decreased 60 bps year over year to 27.8%.

The operating income was $182.7 million, down 8.7% year over year. The operating margin was 22.6%, down 100 bps year over year. Interest expenses (net) decreased 39.1% year over year to $8.1 million.

Balance Sheet and Cash Flow

While exiting the second quarter, IDEX’s cash and cash equivalents were $700.7 million compared with $534.3 million at the end of fourth-quarter 2023. Long-term borrowings (net) were $1.30 billion compared with $1.33 billion at the end of fourth-quarter 2023.

In the first six months of 2024, IDEX generated net cash of $290.2 million from operating activities, up 0.4% from the year-ago period. Capital expenditures were $35.9 million compared with $48.2 million in the first six months of 2023. In the same period, free cash flow was $254.3 million, up 5.5% year over year.

IDEX paid out dividends totaling $100.7 million in the first six months of 2024, up 7.2% year over year.

Outlook

For the third quarter, IDEX anticipates adjusted earnings to be in the band of $1.85-$1.90 per share.

On a GAAP basis, IDEX predicts earnings to be in the range of $1.61-$1.66 per share and a 0-1% increase in organic sales from the respective year-ago readings.

For 2024, IDEX anticipates adjusted earnings to be $7.80-$7.90 per share, down from the earlier projected range of $8.15 - $8.45. The figure indicates a decrease from earnings of $8.22 per share reported in 2023. On a GAAP basis, earnings are predicted to be $6.85-$6.95 per share, down from the earlier guided range of $7.13-$7.43.

Organic sales are predicted to decline 1-2% compared with the 0-2% decline guided earlier.

 

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -12.65% due to these changes.

VGM Scores

At this time, Idex has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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 F. 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. It's no surprise Idex has a Zacks Rank #4 (Sell). We expect a below average 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, Illinois Tool Works (ITW Quick QuoteITW - Free Report) , a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended June 2024 more than a month ago.

Illinois Tool Works reported revenues of $4.03 billion in the last reported quarter, representing a year-over-year change of -1.2%. EPS of $2.54 for the same period compares with $2.41 a year ago.

Illinois Tool Works is expected to post earnings of $2.54 per share for the current quarter, representing a year-over-year change of -0.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.4%.

Illinois Tool Works 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.