IDEX Stock Gains From Business Strength, Headwinds Persist

IDEX Corporation IEX is benefiting from solid momentum in the Fluid & Metering Technologies segment. Persistent strength in the intelligent water business, driven by solid demand in the North American municipal market, bodes well for the segment. The segment’s organic revenues increased 3% on a year-over-year basis in the fourth quarter of 2024. Driven by the favorable trend in its business, the company anticipates overall organic revenues to increase 1-3% year over year in 2025.

The company intends to strengthen and expand its businesses through buyouts. In September 2024, IDEX acquired Mott Corporation and its subsidiaries (Mott) for $1 billion. This acquisition expanded the company’s applied materials science technology capabilities and strengthened its micro-precision technology offerings in key markets such as semiconductor fabrication, medical technologies and water purification.

Also, in December 2023, IEX closed the buyout of advanced material science solutions provider STC Material Solutions for $206 million. This buyout expanded the company’s growing expertise in the material sciences space. In the fourth quarter of 2024, acquisitions had a positive impact on sales of 6%.

Management remains focused on rewarding its shareholders through dividend payouts and share buybacks. For instance, in 2024, IDEX paid dividends worth $205.3 million, an increase of 7.7% year over year. Also, it hiked its quarterly dividend rate by 7.8% in May 2024.

IEX’s Price Performance

In the past month, the Zacks Rank #3 (Hold) company has lost 3.9% compared with the industry’s 6% decline.

However, IDEX is grappling with weakness in the Health & Science Technologies segment due to a lower demand environment across the life sciences, analytical instrumentation, automotive and semiconductor capital equipment markets. In 2024, the segment’s organic revenues declined 7% year over year and were flat in the fourth quarter.

Rising selling, general and administrative expenses are a threat to IDEX’s bottom line. The metric grew 14% year over year in the fourth quarter of 2024. Increasing amortization expenses and professional services and discretionary spending are raising its expenses. As a percentage of sales, the metric increased 90 bps year over year to 22.9% in the same period. This upward trajectory follows a pattern of expense growth in the preceding three quarters, with increases of 10.3%, 4.9% and 2.9%, respectively. Also, the company’s cost of sales recorded an increase of 9.7% year over year in the fourth quarter.

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This article originally published on Zacks Investment Research (zacks.com).

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