AMETEK (AME) Retains Competitive Edge Despite Inherent Risks
Zacks Investment Research | Sep 12, 2017 10:22PM ET
On Sep 12, we issued an updated research report on technology firm, AMETEK Inc. (NYSE:AME) .
AMETEK is a leading worldwide manufacturer of electronic appliances and electromechanical devices. The company sells its products globally through two major operating groups, the Electronic Instruments Group (“EIG”) and the Electromechanical Group (“EMG”).
Growth Drivers
Management has been making strategies to improve its productivity, increase organic sales through global market expansion and new product development. This, in turn, has helped AMETEK to build an excellent backlog that has resulted in solid performance.Solid execution and global market expansion are other positives.
Moreover, the company’s strong business portfolio serves as another growth driver. In fact, AMETEK has been consistently introducing new and improved products that added to its vastly differentiated product pipeline. Some of the recent launches include Custom Cooling Systems, the new DC power supply and high-speed camera.
The consistent product introductions by the company generate customer loyalty and facilitate market share gains, thereby boosting revenues. Evidently, products introduced over the last three years made up 24% of revenues. This indicates that the company is not only good at developing products but also at marketing them.
Also, AMETEK supplements organic growth with strategic acquisitions. For this purpose, it generally looks for niche players that complement one of its many product lines or round out its portfolio.
Recently, the company completed the acquisition of instrumentation provider, MOCON, Inc. for $30 per share in cash or a total value of about $182 million. The deal will compliment its existing gas analysis instrumentation business. MOCON’s products will provide opportunities to AMETEK to further expand into the growing food and pharmaceutical package testing market.
Estimate revision trends for 2017 also remain favorable with 10 estimates moving north and none moving in the opposite direction in the last 60 days. Additionally, earnings estimates climbed 1.6% to $2.52 per share over the same time frame.
Headwinds
Notably, AMETEK has underperformed the industry on a year-to-date basis. Shares of the company have gained 33.6% compared with the Zacks Investment Research
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