Manufacturing company IDEX (NYSE: IEX) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 10.1% year on year to $878.7 million. On the other hand, next quarter’s revenue guidance of $871.5 million was less impressive, coming in 2% below analysts’ estimates. Its non-GAAP profit of $2.03 per share was 5.2% above analysts’ consensus estimates.

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“Our IDEX teams executed well in the third quarter, delivering solid results in an uncertain macroeconomic environment. We are focused squarely on what we can control as we leverage our 8020 approach to drive momentum within our growth platforms. Our teams are effectively collaborating across businesses to support our fastest growing customers, and our results are strong evidence of this, positioning IDEX to deliver against targets for the second half of 2025,” said Eric D. Ashleman, IDEX Corporation Chief Executive Officer and President.

Company Overview

Founded in 1988, IDEX (NYSE: IEX) is a global manufacturer specializing in highly engineered products such as pumps, flow meters, and fluidics systems for various industries.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, IDEX’s sales grew at a decent 7.9% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. IDEX’s recent performance shows its demand has slowed as its annualized revenue growth of 1.9% over the last two years was below its five-year trend.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, IDEX’s organic revenue was flat. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, IDEX reported year-on-year revenue growth of 10.1%, and its $878.7 million of revenue exceeded Wall Street’s estimates by 2%. Company management is currently guiding for a 1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 3.4% over the next 12 months. Although this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Operating Margin

IDEX has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 22.1%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, IDEX’s operating margin decreased by 3.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, IDEX generated an operating margin profit margin of 21.1%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

IDEX’s decent 8.9% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

IDEX’s two-year annual EPS declines of 3.1% were bad and lower than its 1.9% two-year revenue growth.

We can take a deeper look into IDEX’s earnings to better understand the drivers of its performance. While we mentioned earlier that IDEX’s operating margin was flat this quarter, a two-year view shows its margin has declined. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, IDEX reported adjusted EPS of $2.03, up from $1.90 in the same quarter last year. This print beat analysts’ estimates by 5.2%. Over the next 12 months, Wall Street expects IDEX’s full-year EPS of $7.89 to grow 6%.

Key Takeaways from IDEX’s Q3 Results

We enjoyed seeing IDEX beat analysts’ organic revenue expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 1.8% to $170 immediately after reporting.

Indeed, IDEX had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.