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IDEX (IEX) To Report Q3 Earnings: What’s in the Cards?


Industrial goods manufacturer, IDEX Corporation IEX is scheduled to report third-quarter 2017 results after the closing bell on Oct 16. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 2 cents. IDEX’s earnings track record has been quite healthy, having beaten estimates in three of the trailing four quarters with an average beat of 4%.

Let's see how things are shaping up for the upcoming quarterly results.

Key Factors to Consider

With operations across five continents, IDEX’s performance is exposed to the adverse impact of macroeconomic cycles in the United States and international markets. Rising dollar strength and unfavorable foreign currency movements are further likely to add to the woes and impact its bottom line.

In addition, the company operates in a highly competitive industry. Maintaining and improving its competitive position entails continued investment in manufacturing, engineering, quality standards, and support and distribution networks. This involves huge recurring R&D expenses that increase its operating costs. This also reduces IDEX’s price control over its products, which often leads to loss of market share, decline in top-line growth and lower operating margin. The impending quarterly results are likely to witness these trends as well, affecting its bottom line.

For the to-be-reported-quarter, IDEX’s revenues are likely to be affected by the volatility in the market as it procures substantial amount of raw materials and components from suppliers across the globe. This makes it susceptible to various operating risks, including the availability and prices for raw materials, curtailment or change in parts and components, interruptions in production by suppliers and prevailing price levels.

However, IDEX is striving to counter the muted growth environment by improving productivity and conducting heavy restructuring initiatives across its portfolio. At the same time, it aims to exploit suitable acquisition opportunities to fuel its inorganic growth momentum. These acquisitions expand its geographic reach, fill technology gaps and strengthen its foothold in the existing markets along with expanding its product lines.

The company also aims to increase its market exposure and improve sales mix by continually developing new products. With a flexible yet disciplined focus on expenses and productivity, it intends to optimize the cost structure, increase competitiveness and reallocate resources to improve profitability.

Earnings Whispers

Our proven model does not conclusively show that IDEX is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at -0.13%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

IDEX Corporation Price and EPS Surprise

IDEX Corporation Price and EPS Surprise | IDEX Corporation Quote

Zacks Rank: IDEX has a Zacks Rank #2. While this increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Applied Materials, Inc. AMAT has an Earnings ESP of +0.37% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eli Lilly and Company LLY has an Earnings ESP of +1.59% and a Zacks Rank #3.

KEMET Corporation KEM has an Earnings ESP of +7.46% and a Zacks Rank #1.

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