AMETEK Inc. 's AME fourth-quarter 2016 earnings of 58 cents per share came in line with the Zacks Consensus Estimate. Earnings were up 3.6% sequentially but down 8.6% year over year. Earnings also matched the midpoint of the guided range of 57 cents to 59 cents.
On a year-over-year basis, revenues were negatively impacted by weakness in oil and gas and metals markets. However, these markets have started to stabilize.
In the quarter, the company took up realignment initiatives. The company continues to reap the benefits from the execution of its four core growth strategies of operational excellence, global market expansion, investments in product development and strategic acquisitions.
The numbers in detail-
Total Revenue
AMETEK reported revenues of $973 million, up 3% sequentially but down 1.5% year over year. Revenues came ahead of the Zacks Consensus Estimate of $971 million.
The company has two operating segments - Electronic Instruments Group (EIG) and Electromechanical Group (EMG) - which accounted for 63% and 37%, respectively of total revenue in the fourth quarter.
Revenues by Segment
Revenues of EIG were up 6.3% sequentially but down 2% on a year-over-year basis to $616 million. The year-over-year decrease was due to weakness in oil and gas business, which was largely offset by contribution from the acquisitions of ESP/SurgeX, Brookfield Engineering Laboratories, Nu Instruments and HS Foils.
EMG sales were down 2.4% sequentially and 0.7% on a year-over-year basis to $356.9 million. The decline was mainly due to foreign currency headwinds. Organic sales were flat year over year. Packaging, Interconnects and Engineered Materials businesses have stabilized.
Operating Performance
AMETEK's gross margin for the quarter was 30%, down 517 basis points (bps) from 35.2% in the preceding quarter and 445 bps from 34.5% a year ago.
The company reported operating income of $212.7 million, higher than the previous quarter's income of $201.1 million but lower than the year-ago quarter figure of $229.5 million.
Operating margin of 21.9% was up 58 bps sequentially but down 137 bps year over year.
Net Income
AMETEK's net income was $134.7 million, or 13.8% of sales, compared with $130.7 million, or 13.8%, in the previous quarter and $150.7 million, or 15.3%, in the year-ago period.
Adjusted earnings of 58 cents per share were higher than 56 cents in the prior quarter but lower than 63 cents reported in the year-ago quarter.
Balance Sheet
Cash and cash equivalents balance at the end of the fourth quarter was $717.3 million, up from $445.2 million in the previous quarter. Long-term debt was $2.06 billion, up from $1.54 billion in the previous quarter.
AMTEK, Inc. Price, Consensus and EPS Surprise
AMTEK, Inc. Price, Consensus and EPS Surprise | AMTEK, Inc. Quote
Outlook
For the first quarter, management expects revenues to be flat sequentially. Earnings are expected to be in a range of 55 cents to 57 cents per share. For the first quarter, the Zacks Consensus Estimate is pegged at 59 cents.
For 2017, management expects revenues to be up in mid-single digits from 2016. Earnings are expected to be in a range of $2.34 to $2.46 per share. For 2017, the Zacks Consensus Estimate is pegged at $2.45 per share.
Zacks Rank and Stocks to Consider
Currently, AMETEK has a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include NVIDIA Corp. NVDA , Linear Technology Corp. LLTC and Intersil Corp. ISIL , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
For the current year, the estimates for NVIDIA stayed unchanged while the same for Intersil and Linear Technology went up 1.47% and 1.83%, respectively in the past 60 days.
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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.
