Here's Why You Should Avoid Betting on IDEX (IEX) Stock Now
IDEX Corporation IEX has appeared to have lost its sheen on difficult end-market conditions and other woes that are predicted to adversely impact its earnings.
The Zacks Rank #4 (Sell) company, which has a market capitalization of $10.2 billion, has also failed to impress investors with its recent share price movement. In the past six months, the stock has lost 15.4% compared with the industry’s decline of 19.5%.
Let’s delve into the factors that have taken a toll on the firm.
Top-Line Woes: In fourth-quarter 2019, IDEX’s organic sales recorded a decline of 2% year over year due to weak demand for industrial products globally. The company expects industrial markets to remain challenging for the first half of 2020. Organic sales for the year are anticipated to be down 2% to flat. Revenues in the year will likely be $2,465-$2,515 million, suggesting a decline of 1% to growth of 1% from the prior-year reported figure.
Bottom-Line Woes: In 2020, IDEX anticipates adjusted earnings per share to decline 4% to rise 1% year over year. Several factors are likely to play spoilsport, with 4-cents adverse impact likely from growth investments, and 6-10 cents from variable compensation. Also, tax rate will likely have an adverse impact of 10 cents per share.
Estimate Trend: In the past 30 days, analysts have increasingly become bearish on the company, as evident from negative earnings estimate revisions. Notably, the Zacks Consensus Estimate for its 2020 earnings has trended down from $5.74 to $5.52 on four downward estimate revisions versus none upward. In addition, over the same timeframe, the consensus estimate for 2021 earnings has trended down from $6.14 to $6.01.
Forex Issues: Given its widespread presence in international markets, the company is exposed to geopolitical issues, macroeconomic challenges and unfavorable movements in foreign currencies. Notably, in fourth-quarter 2019, forex woes adversely impacted its sales by 1%.
In addition, the stock currently looks overvalued compared with the industry on a P/E (TTM) basis, with respective tallies of 23.01x and 17.02x. Notably, the company's multiple is higher than the industry's six-month highest level of 22.64x.
Stocks to Consider
Some better-ranked stocks from the same space are Tennant Company TNC Broadwind Energy, Inc. BWEN and EnPro Industries NPO. While Tennant currently sports a Zacks Rank #1 (Strong Buy), Broadwind Energy and EnPro carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Tennant delivered a positive earnings surprise of 26.60%, on average, in the trailing four quarters.
Broadwind Energy delivered a positive earnings surprise of 10.42%, on average, in the trailing four quarters.
EnPro delivered a positive earnings surprise of 1.98%, on average, in the trailing four quarters.
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EnPro Industries (NPO) : Free Stock Analysis Report
IDEX Corporation (IEX) : Free Stock Analysis Report
Tennant Company (TNC) : Free Stock Analysis Report
Broadwind Energy, Inc. (BWEN) : Free Stock Analysis Report
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