Manufacturing company IDEX (NYSE: IEX) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 7.2% year on year to $865.4 million. On the other hand, next quarter’s revenue guidance of $818.2 million was less impressive, coming in 5.6% below analysts’ estimates. Its non-GAAP profit of $2.07 per share was 4% above analysts’ consensus estimates.

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“IDEX teams once again delivered strong execution in the second quarter in what continues to be a challenging operating environment,” 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. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, IDEX’s 7% annualized revenue growth over the last five years was mediocre. This fell short of our benchmark for the industrials sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. IDEX’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

We can better understand 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 averaged 2.4% year-on-year declines. Because this number is lower than its normal 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 7.2%, and its $865.4 million of revenue exceeded Wall Street’s estimates by 0.9%. Company management is currently guiding for a 2.5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 5% over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below the sector average.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

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.

Looking at the trend in its profitability, IDEX’s operating margin decreased by 3.2 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.

This quarter, IDEX generated an operating margin profit margin of 21.7%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

IDEX’s decent 8% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.

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 4% were bad and lower than its flat revenue.

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 by 1.9 percentage points. 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 Q2, IDEX reported EPS at $2.07, up from $2.06 in the same quarter last year. This print beat analysts’ estimates by 4%. Over the next 12 months, Wall Street expects IDEX’s full-year EPS of $7.76 to grow 10.3%.

Key Takeaways from IDEX’s Q2 Results

It was encouraging to see IDEX beat analysts’ EBITDA expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its full-year revenue and EPS guidance missed fell short. Overall, this quarter could have been better. The stock remained flat at $185.18 immediately after reporting.

IDEX didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.