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AMETEK (AME) Posts In-Line Q4 Earnings

AMETEK Inc. 's AME fourth-quarter 2015 earnings of 63 cents per share matched the Zacks Consensus Estimate. Earnings increased 27.0% sequentially and 30.6% year over year.

Total Revenue

AMETEK reported revenues of $987.9 million, down 1.1% sequentially and 3.5% year over year.

The company has two operating segments - Electronic Instruments Group (EIG) and Electromechanical Group (EMG) - which accounted for 60% and 40% of total fourth-quarter revenue, respectively.

Revenues by Segment

EIG revenues were up 5.0% sequentially but down 2.5% on a year-over-year basis to $628.415 million. The lower sales were due to currency headwinds and weakness across our oil and gas businesses.

EMG sales were down 10.1% from the third quarter and 5.3% from fourth-quarter 2014 to $359.568 million as a result of currency headwinds and weakness across Engineered Materials.

Operating Performance

AMETEK's gross margin for the quarter was 34.5%, down 228 basis points (bps) from 36.7% in the preceding quarter and 77 bps from 35.2% a year ago.

The company reported operating income of $208.8 million, lower than the previous quarter's $237.6 million and the year-ago quarter figure of $227.1 million. Operating margin of 23.2% was down 56 bps sequentially but up 55 bps year over year.

Operating Profit by Segment

The EIG segment reported operating income (excluding realignment costs) of $170.9 million, up slightly year over year. Operating margin went up 110 bps to 27.2% due to Operational Excellence initiatives.

EMG operating income was 5% down year over year to $356.6 million, while operating margin was 19.7%.

Net Income

AMETEK's net income was $150.5 million, or 15.2% of net income margin, compared with $156.4 million, or 15.7%, in the previous quarter and $155.2 million, or 15.2%, in the year-ago period. The one-time item in the fourth quarter was realignmentcost of $20.7 million or $0.06 per diluted shareunlike both the previous and year-ago quarters.

Earnings of 63 cents compared favorably with adjusted earnings of 65 cents in the third quarter and 62 cents in fourth-quarter 2014.

GAAP EPS in the last quarter was 65 cents and same as the year-ago quarter.

Balance Sheet

Cash and cash equivalents balance at the end of the quarter was $381.0 million, up from $328.0 million in the previous quarter. Accounts receivables were $603.1 million as against $610.0 million in the prior quarter. Total debt was $1.52 billion compared with $1.62 billion at the end of the third quarter.

Outlook

For 2016, management expects revenues to be up low single digits on a percentage basis from 2015. Earnings expected to be in the range of $2.55 to $2.65 per diluted share, flat to up 4% over 2015 adjusted results.

Recommendation

AMETEK reported decent fourth-quarter results with the bottom line matching the Zacks Consensus Estimate but the top line missing the same.

The company believes that strong execution of its four core growth strategies of operational excellence, global market expansion, investments in product development and strategic acquisitions will continue to drive growth. This, in combination with a strong portfolio of businesses, will help the company to post better results, going forward.

Stocks to Consider

AMETEK has a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry are ABIOMED, Inc. ABMD , Blue Capital Reinsurance Holdings Ltd. BCRH and Brooks Automation, Inc. BRKS . All these stocks sport a Zacks Rank #1 (Strong Buy).

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AMETEK INC (AME): Free Stock Analysis Report

BROOKS AUTOMATN (BRKS): Free Stock Analysis Report

ABIOMED INC (ABMD): Free Stock Analysis Report

BLUE CAP REINSR (BCRH): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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