Applied solutions provider IDEX Corp. (IEX) has agreed to acquire KZValve. The latter caters chiefly to the agriculture market via its electric valves and controllers.
KZ’s agricultural components include waterproof motorized valves, manifolds, controllers, and other accessories, and are designed to function even in harsh surroundings. It also caters to other segments such as water filtration, de-icing, anti-icing, and emergency fire services.
Notably, the transaction helps IDEX expand its agricultural product offerings while also complementing the current fluid management solutions of Banjo Corp. The move is part of IDEX’s strategy to, “invest in core businesses with secular growth tailwinds while investigating near adjacencies.”
Management Weighs In
The CEO and President of IDEX, Eric Ashleman, commented, “Adding KZValve to the IDEX family of companies will extend our expertise in providing OEMs with critical solutions for agriculture and industrial applications, opening access to new product opportunities. KZValve is a high-quality addition to our portfolio of businesses, with strong customer relationships and differentiated products that will continue building our innovative presence in the agriculture industry.”
The acquisition is expected to close in Q2 2022.
Hedge Fund Activity
TipRanks data points out that Wall Street’s top hedge funds have increased holdings in IDEX by 88,000 shares in the last quarter, indicating a very positive hedge fund confidence signal in the stock based on activities of five hedge funds.
Valuation Speaks
Let us consider some key metrics for IDEX and how it fares against the broader industry.
It has an earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 27.7%, compared to the industry median of 13.3%, which indicates that the company has a better cost structure as compared to its peers. Notably, the company generates $59,630 in net income per employee, whereas the median industry figure is $21,190, indicating that IDEX is far superior in utilizing its workforce.
On the other hand, the forward non-GAAP P/E multiple of 25.94 implies the company’s current share price is on the expensive side against the broader industry, where the median multiple is 18.14. That’s still after a 15.3% slide in share prices so far this year.
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