EUR 850.00 For Business Accounts Only

Morningstar | Ametek Posts Strong 2018 3Q Results

Ametek manufactures industrial equipment used in specialized applications that require precision or accuracy. Anchored by a collection of patents, Ametek's product portfolio features custom solutions that create value for customers, an ability that skews the company's mix away from commoditylike products and more toward differentiated instrumentation and equipment that increase customer reliance and command premium prices. For example, Ametek makes pressure transducers, heat exchangers, and temperature sensors used in the Boeing 787 Dreamliner. These seemingly ordinary parts are highly engineered, necessary components of the aircraft’s hydraulic system; as such, they must be specified, qualified, and designed into the very function of the aircraft.Ametek's portfolio bifurcates into the electronic instruments group (over 60% of revenue), which makes equipment used in measuring physical properties for the purpose of testing or calibration, and the electromechanical group (nearly 40% of revenue), which houses Ametek's legacy motors and floor-care business, as well as precision motion control equipment used in industrial automation systems, thermal management solutions, and engineered materials. Since its founding in 1930, Ametek has acquired its way from a cost-driven, commodity producer of unspecialized motors toward a value-added collection of businesses that command and defend high margins. Today, Ametek estimates that over 90% of its products fall into the differentiated category, which is in stark contrast to the 70%/30% mix that historically skewed toward commoditylike products.We expect that Ametek's number-one priority for free cash flow will continue to be acquisitions. The company targets businesses with dominant positions in niche markets, intending to expand margins over time through a combination of pricing power and operational improvement. In addition, research and development spending represents a little over 5% of sales, highlighting the importance of innovation to Ametek's organic growth. Currently, products that have been internally developed within the past three years represent about one fourth of sales.