On Friday, Ametek Inc . (NYSE:AME) shares received a vote of confidence from Truist Securities as the firm raised its price target on the stock to $221 from $219, while maintaining a Buy rating. This adjustment follows Ametek's notable third-quarter performance, which saw the company's shares close up 8%, in contrast to the S&P 500, which was down 2%.
Ametek's earnings per share (EPS) for the third quarter surpassed expectations, attributed to better margin performance and robust free cash flow generation. In response to the positive quarter, the company has increased its full-year 2024 EPS guidance to a range of $6.77-$6.82, up from the prior forecast of $6.70-$6.80. The upward revision reflects the third quarter's earnings beat.
The company reported a 5% increase in total sales for the quarter, with acquisitions contributing 7.5 points to growth, despite a 2% decline in organic growth. The core margin performance was particularly strong at 27.4%, marking a 40 basis point year-over-year improvement.
By segment, the Electronic Instruments Group (EIG) saw flat sales with a 2% decline in organic sales, yet still achieved solid core margins of 30.2%, up 70 basis points from the previous year.
Ametek's total orders grew by 12%, with organic orders increasing by 2% year-over-year. The book-to-bill ratio was positive at 1.02X, and the company's backlog was robust, nearing record levels at $3.44 billion. Despite continuing to navigate destocking with OEM customers, Ametek highlighted the return to form of its Paragon acquisition and the strategic acquisition of Virtek Vision, which aligns with its Creaform division.
The company also demonstrated its financial strength by repurchasing $60 million of its stock and maintaining a strong pipeline of potential acquisitions that could further accelerate growth. Ametek has set a target for free cash flow (FCF) conversion at 115-120%, signaling continued financial health and operational efficiency.
In other recent news, Ametek Inc. reported a successful third quarter in 2024, with sales reaching $1.71 billion, a 5% increase from the same period last year. Earnings per diluted share hit $1.66, surpassing the company's guidance, and operating income rose to $446 million. In addition, the company's order book increased by 12%, with a near-record backlog of $3.44 billion. These recent developments highlight Ametek's robust performance.
RBC Capital Markets adjusted its price target for Ametek to $210 from the previous $215, while sustaining an Outperform rating on the stock. This follows a positive inflection in organic orders and the company's backlog reaching near-record levels. Despite ongoing macroeconomic concerns, Ametek's project environment has shown signs of stability, with no increase in customer cancellations reported.
Ametek has raised its full-year earnings guidance to a range of $6.77 to $6.82 per diluted share, and continues to focus on long-term growth, investing an additional $90 million in growth initiatives for 2024.
The company's financial health remains solid, with a decrease in total debt and a strong free cash flow conversion rate, providing the means for ongoing share repurchases and potential acquisitions. These are recent developments in the company's performance and outlook.
InvestingPro Insights
Ametek's recent performance and Truist Securities' upgraded price target are further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $42.45 billion, reflecting its strong position in the market. Ametek's revenue for the last twelve months as of Q2 2024 reached $6.82 billion, with a notable revenue growth of 6.29% over the same period.
InvestingPro Tips highlight Ametek's financial stability and growth potential. The company has maintained dividend payments for 54 consecutive years, demonstrating a commitment to shareholder returns. This aligns with the article's mention of Ametek's strong free cash flow generation and its target for free cash flow conversion at 115-120%.
Additionally, Ametek's stock has shown a strong return over the last three months, with InvestingPro data indicating a 15.41% price total return. This performance supports the article's observation of Ametek's shares closing up 8% following its third-quarter results.
For investors seeking a deeper understanding of Ametek's financial health and market position, InvestingPro offers 16 additional tips, providing a comprehensive analysis to inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.