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Ametek (AME) Up 7.4% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Ametek (AME). Shares have added about 7.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ametek 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.

AMETEK Beats Q3 Earnings Estimates

AMETEK reported third-quarter 2023 adjusted earnings of $1.64 per share, beating the Zacks Consensus Estimate by 3.8%. The bottom line rose 13.1% on a year-over-year basis.

Net sales of $1.62 billion lagged the Zacks Consensus Estimate by 1.5%. The top line increased 4.6% year over year.

Top-line growth was driven by solid momentum across the Electronic Instruments segment.

Operating Details

Electronic Instruments (70% of sales) sales of $1.14 billion increased 7.8% year over year. The figure topped the consensus mark by 0.05%.

The Electromechanical segment (30% of sales) generated $486.7 million in sales in the third quarter, which declined 2.2% on a year-over-year basis. The figure lagged the Zacks Consensus Estimate by 4.2%.

For the third quarter, operating expenses were $1.18 billion, up 1.5% year over year. The figure contracted 220 basis points (bps) year over year 73%.

Consequently, the operating margin was 27%, which expanded 220 bps from the year-ago quarter’s figure.

The operating margin for Electronic Instruments expanded 360 bps year over year to 29.5%. The Electromechanical segment’s operating margin contracted 120 bps on a year-over-year basis to 26.2%.

Balance Sheet

As of Sep 30, 2023, cash and cash equivalents were $841.9 million, up from $605.6 million as of Jun 30, 2023.

Long-term debt was $1.86 billion as of Sep 30, 2023, up from $2.19 billion as of Jun 30, 2023.

Operating cash flow jumped 45% year over year to a record $473 million in the third quarter.

Guidance

For fourth-quarter 2023, AMETEK expects sales growth in the mid-single digits year over year.

AMETEK expects adjusted earnings of $1.61-$1.63 per share, suggesting growth of 6-7% from the year-ago quarter’s reported number.

For 2023, AME expects sales growth in the mid to high-single digits from the 2022 level.

AMETEK expects adjusted earnings between $6.31 and $6.33 per share, suggesting growth of 11% from the 2022 reported level.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Ametek has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ametek 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

Ametek belongs to the Zacks Electronics - Testing Equipment industry. Another stock from the same industry, Teradyne (TER), has gained 12.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

Teradyne reported revenues of $703.73 million in the last reported quarter, representing a year-over-year change of -14.9%. EPS of $0.80 for the same period compares with $1.15 a year ago.

Teradyne is expected to post earnings of $0.71 per share for the current quarter, representing a year-over-year change of -22.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.4%.

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

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