The following ratings changes were generated on Wednesday, Dec. 24.
We've downgraded Ametek (AME), which manufactures and markets electronic instruments and electromechanical devices, from buy to hold. Strengths include its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, we also find weaknesses including a decline in the stock price during the past year and poor profit margins.
Return on equity has improved slightly since the same quarter a year ago, outperforming the S&P 500 but underperforming the electrical equipment industry. Ametek's gross profit margin of 33.1% is low, though it has increased since the same period last year. Its net profit margin of 11% trails the industry average.
Revenue rose by 22.4% since the same quarter a year ago, exceeding the industry average growth of 10.1% and helping boost earnings per share, which improved 24.5% in the most recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive EPS growth over the past two years, which we feel should continue, suggesting improving business performance. During the past fiscal year, it earned $2.12 vs. $1.71 in the prior year, and this year, the market expects further improvement to $2.55.Shares are down 38.8% on the year. Naturally, the overall market trend is bound to be a significant factor, and in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV