Ametek (AME) AI Stock Analysis

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Ametek

(NYSE:AME)

76Outperform

AME's strong financial performance, highlighted by record-breaking earnings and a robust balance sheet, is the primary driver of its favorable stock score. The positive sentiment from the earnings call, with record sales and strategic initiatives, supports this view. However, technical analysis indicates some short-term weakness, and the relatively high P/E ratio suggests that the stock may be overvalued, limiting the overall score.

Positive Factors

Acquisitions

Ametek closed on the acquisition of Kern Microtechnik, manufacturers of high-precision machining equipment, historically acquisitions have been positive catalysts for AME shares.

CEO Outlook

CEO Zapico is optimistic on the M&A pipeline, indicating future growth potential for AME.

Financial Performance

The company experienced a significant stock price increase by 8.5%, driven by a margin-driven EPS beat and an upturn in total orders.

Negative Factors

Earnings Guidance

Initial 2025 adj. EPS guidance ($7.02-7.18) was below prior $7.30 consensus.

End Market Stability

Despite strong performance in some areas, pockets of softness in end market stability still exist.

Growth Projections

Persistent de-stocking led to a lower organic growth guide, which is not as high as preferred.

Ametek (AME) vs. S&P 500 (SPY)

Market Cap

$35.23B

Dividend Yield0.75%

Average Volume (3M)1.42M

Price to Earnings (P/E)25.8

Beta (1Y)0.88

Revenue Growth5.22%

EPS Growth4.46%

CountryUS

Employees21,500

SectorIndustrials

Sector Strength63

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)5.93

Shares Outstanding230,746,900

10 Day Avg. Volume1,598,090

30 Day Avg. Volume1,423,319

Financial Highlights & Ratios

PEG Ratio5.77

Price to Book (P/B)N/A

Price to Sales (P/S)5.80

Price to Cash Flow (P/CF)18.30

P/FCF Ratio18.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$199.17

Price Target Upside30.47% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering8

Ametek Business Overview & Revenue Model

Company DescriptionAmetek, Inc. (AME) is a leading global manufacturer of electronic instruments and electromechanical devices. The company operates through two main business segments: Electronic Instruments Group (EIG) and Electromechanical Group (EMG). Ametek provides a wide range of products including advanced monitoring, testing, calibration, and display instruments, as well as precision motion control solutions and specialty metals. The company's offerings are used in a variety of industries such as aerospace, power, industrial, and medical sectors.

How the Company Makes MoneyAmetek generates revenue primarily through the design, manufacturing, and distribution of its diverse range of electronic instruments and electromechanical devices. The Electronic Instruments Group (EIG) contributes significantly to its earnings by providing highly advanced and reliable monitoring and testing equipment used in sectors like power generation, aerospace, and industrial production. The Electromechanical Group (EMG) adds to the revenue stream through the production of precision motion control products and specialty metals that serve industries including aerospace, automotive, and medical. Ametek's business model involves direct sales to customers, as well as through a network of distributors and partners, which enables the company to reach a wide customer base globally. Strategic acquisitions of complementary businesses also play a crucial role in enhancing their product offerings and expanding their market reach, which further contributes to their financial performance.

Ametek Financial Statement Overview

Summary

Ametek shows strong financial health with impressive revenue and profit growth, solid balance sheet metrics, and generally healthy cash flows. The company's income statement and balance sheet scores are high, reflecting strong operational efficiency and prudent financial management. However, the cash flow score suggests a need for updated reporting.

Income Statement

Very Positive

Ametek has shown solid growth in revenues, with a consistent upward trend over the years, increasing from $4.54 billion in 2020 to $6.94 billion in 2024. The net profit margin is robust, supported by a significant net income increase from $872 million in 2020 to $1.38 billion in 2024. The company's EBIT and EBITDA margins are strong, reflecting operational efficiency.

Balance Sheet

Very Positive

The balance sheet is strong, with a healthy equity ratio of approximately 66% in 2024. The debt-to-equity ratio has improved over the years, indicating prudent financial management. Return on equity remains high, showcasing effective utilization of shareholder funds. However, total assets have slightly decreased from 2023 to 2024, which warrants monitoring.

Cash Flow

Positive

Ametek's cash flow statements show stability, with free cash flow consistently positive, although it was zero in 2024 due to unreported figures. Historically, the company has maintained a strong operating cash flow relative to net income. The lack of current cash flow data suggests a need for updated reporting.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
6.94B	6.60B	6.15B	5.55B	4.54B
	Gross Profit
2.48B	2.38B	2.15B	1.91B	1.54B
	EBIT
1.78B	1.71B	1.50B	1.31B	1.03B
	EBITDA
2.16B	2.03B	1.83B	1.60B	1.42B
	Net Income Common Stockholders
1.38B	1.31B	1.16B	990.05M	872.44M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
374.00M	409.80M	345.39M	346.77M	1.21B
	Total Assets
14.63B	15.02B	12.43B	11.90B	10.36B
	Total Debt
2.08B	3.37B	2.39B	2.54B	2.41B
	Net Debt
1.71B	2.96B	2.04B	2.20B	1.20B
	Total Liabilities
4.98B	6.29B	4.95B	5.03B	4.41B
	Stockholders Equity
9.66B	8.73B	7.48B	6.87B	5.95B
Cash Flow		Free Cash Flow
1.70B	1.60B	1.01B	1.05B	1.21B
	Operating Cash Flow
1.83B	1.74B	1.15B	1.16B	1.28B
	Investing Cash Flow
-244.81M	-2.38B	-552.76M	-2.06B	61.63M
	Financing Cash Flow
-1.60B	697.28M	-575.70M	39.34M	-539.44M

Ametek Technical Analysis

Technical Analysis Sentiment

Negative

Last Price152.66

Price Trends

50DMA

180.45

Negative

100DMA

183.77

Negative

200DMA

175.75

Negative

Market Momentum

MACD

-2.68

Positive

RSI

38.26

Neutral

STOCH

26.42

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AME, the sentiment is Negative. The current price of 152.66 is below the 20-day moving average (MA) of 173.89, below the 50-day MA of 180.45, and below the 200-day MA of 175.75, indicating a bearish trend. The MACD of -2.68 indicates Positive momentum. The RSI at 38.26 is Neutral, neither overbought nor oversold. The STOCH value of 26.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AME.

Ametek Risk Analysis

Ametek disclosed 18 risk factors in its most recent earnings report. Ametek reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Ametek Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AME	76 Outperform	$35.23B	25.76	14.97%	0.75%	5.22%	4.46%
ITW	74 Outperform	$66.17B	19.26	110.24%	2.62%	-1.30%	20.26%
PH	74 Outperform	$66.60B	21.40	25.87%	1.26%	0.41%	19.76%
EMR	72 Outperform	$53.33B	22.49	9.66%	2.23%	10.29%	22.72%
IR	70 Outperform	$28.09B	33.84	8.40%	0.11%	5.22%	8.01%
ROK	69 Neutral	$25.68B	28.26	26.22%	2.25%	-11.28%	-23.69%
Sector *	62 Neutral	$7.25B	12.39	3.08%	3.39%	3.63%	-14.32%

* Industrials Sector Average

Performance Comparison

AME

Ametek

152.66

-27.08

-15.07%

EMR

Emerson Electric Company

94.57

-18.06

-16.03%

ITW

Illinois Tool Works

225.57

-30.35

-11.86%

Parker Hannifin

517.23

-42.83

-7.65%

ROK

Rockwell Automation

227.11

-49.76

-17.97%

Ingersoll Rand

69.70

-24.23

-25.80%

Ametek Earnings Call Summary

Earnings Call Date: Feb 4, 2025 | % Change Since: -16.94% | Next Earnings Date: May 6, 2025

Earnings Call Sentiment Positive

AMETEK's Q4 2024 performance was strong, with record-breaking financial metrics, robust order growth, and successful strategic initiatives such as acquisitions and share repurchases. Despite challenges such as organic sales decline and inventory destocking, the overall outlook remains positive with a focus on long-term growth.

Highlights

Record-Breaking Financial Performance

AMETEK achieved record levels for sales ($1.76 billion), operating income ($469 million), EBITDA ($561 million), and diluted earnings per share ($1.87) in Q4 2024. Free cash flow also reached a record $498 million, up 4% from the previous year, with a cash flow to net income conversion of 129%.

Strong Order Growth and Backlog

Organic orders increased by 4% in Q4, contributing to a strong backlog of $3.4 billion. Positive order growth was noted across both the EIG and EMG segments.

Successful Share Repurchases and Acquisitions

AMETEK repurchased $155 million in shares in Q4 and $220 million for the year. The acquisition of Kern Microtechnik for approximately €105 million was announced, aligning with their strategic growth initiatives.

Margin Expansion

Operating margins improved to 26.6% in Q4, up 90 basis points from the prior year. Core margins increased by 140 basis points, and EBITDA margins reached 31.9%.

EIG Segment Performance

EIG operating income reached a record $386.6 million, with operating margins at 31.8%, up 280 basis points from the prior year. Growth was driven by Aerospace and Defense and Advanced Optical Metrology businesses.

Lowlights

Decline in Organic Sales

Q4 2024 saw a 3% decline in organic sales, although acquisitions added 5 points to sales growth. The Electromechanical Group's organic sales were down 4%.

Inventory Destocking Challenges

The EMG segment faced headwinds from inventory destocking, particularly impacting OEM exposed businesses, leading to a 1% decrease in operating income for the segment.

Project Delays in EIG

Similar to the previous year, EIG experienced some project delays as customers remained cautious at year-end, affecting sales.

Company Guidance

In the AMETEK Fourth Quarter 2024 earnings call, the company provided comprehensive guidance with several key metrics. Sales reached a record $1.76 billion, marking a 2% increase from the previous year, although organic sales decreased by 3%. Acquisitions contributed a 5% sales increase, and foreign currency impact was neutral. AMETEK's operating income was a record $469 million, up 5% year-over-year, with operating margins improving by 90 basis points to 26.6%. EBITDA was also a record at $561 million, with margins of 31.9%. The company generated a record $498 million in free cash flow, with a conversion rate of 129%. Diluted earnings per share were $1.87, an 11% increase from the previous year, surpassing the guidance range of $1.81 to $1.06. For 2025, AMETEK anticipates low single-digit growth in both overall and organic sales and projects diluted earnings per share to be in the range of $7.02 to $7.18, reflecting a 3% to 5% increase over 2024.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.