Tags: AMETEK | AME | aerospace | midcap

A Mid-Cap Industrial Offering Growth

By    |   Tuesday, 23 Aug 2011 10:59 AM

AMETEK (AME) is a quiet midcap industrial company and the type of stock which can be overlooked by the retail investing crowd. It doesn't produce brand-name products or provide a service investors run across every day. For value investors looking for affordable growth, this is the type of stock to hunt.

The company's business is nearly evenly divided between the manufacture of electronic instruments and of electromechanical devices. AMETEK's customers are manufacturers in aerospace, energy, power production, and consumer devices. Revenues are pretty evenly split between sales to domestic customers and international.

Recent financial results for AMETEK have been positive. Each of the last three quarters earnings reports, through the second quarter of 2011, were titled "AMETEK Announces Record Results." In 2009, the company saw revenues decline by about 20 percent due to the economic recession. Earnings per share for the year dropped 17 percent to $1.27. In 2010, sales bounced back to almost equal 2008 and net income of $1.76 exceeded the 2008 results by 24 cents.

In the first six months of 2011 the company was on pace to increase sales to $2.9 billion, up from $2.4 billion, to post earnings per share of approximately $2.30. Net income per share for the first six months equaled $1.14.

Growth through acquisition

Besides generating an attractive level of organic growth, AMETEK is active in buying up companies which complement its business lines. In the first half of the year, the company made two acquisitions of private held manufacturing companies, spending a total of approximately $200 million. By mid-year the balance sheet still showed $200 million of cash.

AMETEK literature spells out a goal of doubling sales and net profits over the next five years. UBS analysts recently increased their estimates of the company's net earnings through 2012, citing increased sales and profit margins. The UBS target price for AME is $47. The company reports next on Oct. 26.

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AMETEK (AME) is a quiet midcap industrial company and the type of stock which can be overlooked by the retail investing crowd. It doesn't produce brand-name products or provide a service investors run across every day. For value investors looking for affordable growth, this...
AMETEK,AME,aerospace,midcap
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2011-59-23
Tuesday, 23 Aug 2011 10:59 AM
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