Ametek Continues Well-Oiled Acquisition Strategy With Paragon Purchase

Senior Equity Analyst

Joshua Aguilar

Ametek is a cash compounder that combines premier elements of best-in-class conglomerates. First, like Roper, Ametek prefers allocating capital through acquisitions. Its asset-light model’s firepower focuses on companies that compete on differentiated technology and hold dominant positions in oligopolistic niches. Second, like Danaher and Fortive, the company materially improves its targets’ underlying operating margins. Ametek often reduces the amount targets spend on raw material costs through superior supply chain sourcing. Third, like 3M, Ametek allocates a large quantity of dollars as a percentage of sales to research, development, and engineering (about 5.5% of Ametek's sales). RD&E expenditures allow Ametek to charge a premium for its products relative to the market. They also provide Ametek with greater than inflation pricing power, generally a minimum 50-basis-point spread. Finally, like Idex, Ametek generally focuses its acquisition activities on existing adjacencies. In our view, this focus minimizes the firm’s execution risks. 

Despite these similarities, Ametek’s businesses are unique. Ametek’s electrical instruments group segment is a world leader in the precision instrumentation market. EIG sells test and measurement apparatuses that are vitally important to the markets they serve and with few alternatives. Compliance needs drive demand for these types of products, which translates to an inherently high cost of failure for Ametek's customers. Ametek’s electromechanical group sells highly engineered, mission-critical equipment. The firm’s overall portfolio has exposure to key, higher-growing portions of the economy, like medical, which benefits from research spending and the rise of infectious diseases, and defense spending.

We are bullish on Ametek's recent acquisitions in Navitar, which offers high-precision, fully integrated imaging systems in mission-critical end markets, and Paragon, which manufactures highly engineered medical components and instruments in orthopedics. Acquisitions like these reinforce the firm’s already strong switching costs and further provides Ametek with enough ammunition to make value-creative acquisitions for many years.

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AMETEK

AMETEK, Inc. engages in the manufacture of electronic instruments and electromechanical devices. It operates through the following two segments: Electronic Instruments and Electromechanical. The Electronic Instruments segment designs and manufactures advanced instruments for the process, aerospace, power and industrial markets. The Electromechanical segment supplies automation solutions, thermal management systems, specialty metals and electrical interconnects. The company was founded in 1930 and is headquartered in Berwyn, PA.

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AME reports outstanding Q1 results, anticipates growth in key markets

AME's Q1 2023 delivered exceptional results, with record sales, order growth, and margin expansion. The company remains cautious amid macroeconomic uncertainties but is confident in its ability to manage challenges. AME anticipates growth opportunities in motion control acquisitions, aerospace, semiconductor, and medical markets.

AME reports exceptional Q3 results and bullish outlook on acquisitions

AME's strong financial performance and strategic acquisitions were highlighted in the call. The company's outlook for 2024 and its approach to deals in the current interest rate environment were discussed. AMETEK plans to maintain a balanced portfolio and is monitoring the impact of higher interest rates and supply chain constraints in aerospace and defense businesses.

AME reports record Q4 performance, eyes growth in Asia

AME delivered exceptional Q4 performance, with record sales and strong growth in the U.S. and Asia. The company anticipates challenges in China's market and organic orders but sees opportunities in overall sales growth, advanced packaging, and the improving memory market. AMETEK remains optimistic about the future, expecting a return to more typical growth for the industrial market.

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AMETEK, Inc. engages in the manufacture of electronic instruments and electromechanical devices. It operates through the following two segments: Electronic Instruments (EIG) and Electromechanical (EMG). The EIG segment designs and manufactures advanced instruments for the process, aerospace, power and industrial markets. The EMG segment supplies automation solutions, thermal management systems, specialty metals and electrical interconnects. The company was founded in 1930 and is headquartered in Berwyn, PA.

AMETEK (AME) to acquire Gatan from Roper Technologies. The buyout is expected to strengthen Electronic Instruments Group segment.

AMETEK to Boost Electron Microscopic Capabilities with Gatan

Roper's (ROP) Gatan divestment, to be completed in the fourth quarter of 2019, will help it concentrate on its core and profitable businesses.

Roper (ROP) Agrees to Sell Gatan to AMETEK for $925M in Cash

Ametek, Inc. (NYSE: AME) is to acquire Gatan from Roper Technologies, Inc. (NYSE: ROP) in a cash transaction valued at $925 million.

Ametek Buys Gatan From Roper For $925M In Cash

Roper Technologies

Ametek Inc. [s; ame], a maker of electronic instruments and electro-mechanical devices, said Friday it has agreed to acquire Gatan, a maker of instrumentation and software for electron microscopes, from Roper Technologies Inc.

Ametek to acquire Roper Technologies' Gatan for $925 million in cash

Ametek (AME) reported earnings 30 days ago. What's next for the stock?

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Ametek (AME) delivered earnings and revenue surprises of 1.94% and -2.28%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

Ametek (AME) Q2 Earnings Beat Estimates

AMETEK's (AME) second-quarter 2019 earnings benefit from solid organic growth and positive contributions from acquisitions.

AMETEK (AME) Beats Q2 Earnings Estimates, Lags Revenues

Amtek (AME) delivered earnings and revenue surprises of 1.94% and -2.28%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

Amtek (AME) Q2 Earnings Beat Estimates

AMETEK's (AME) Q2 earnings are likely to be driven by strong organic growth and contributions from acquisitions. Yet, ongoing trade tensions might affect its upcoming results.

What's in the Cards for AMETEK (AME) This Earnings Season?

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Mario Gabelli Comments on AMETEK

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AMETEK's (AME) board appoints Tod E. Carpenter as the new director.

AMETEK (AME) Appoints Tod E. Carpenter as the New Director

Amtek (AME) might move higher on growing optimism about its earnings prospects, which is reflected by its upgrade to a Zacks Rank #2 (Buy).

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Amtek (AME) reported earnings 30 days ago. What's next for the stock?

Why Is Amtek (AME) Down 3.7% Since Last Earnings Report?

AMETEK, Inc.'s (AME) CEO Dave Zapico on Q1 2019 Results - Earnings Call Transcript

Amtek (AME) delivered earnings and revenue surprises of 3.09% and 1.09%, respectively, for the quarter ended March 2019. Do the numbers hold clues to what lies ahead for the stock?

Amtek (AME) Beats Q1 Earnings and Revenue Estimates

AMETEK's (AME) first-quarter 2019 results benefit from solid organic growth and positive contributions from acquisitions.

AMETEK (AME) Q1 Earnings and Revenues Surpass Estimates

Amtek (AME) Hits 52-Week High, Can the Run Continue?

AMETEK's (AME) first-quarter results are likely to benefit from positive contributions from acquisitions.

News for AMETEK Stock (AME)