AMETEK, Inc.
Analysis
The story has flipped: a two-year industrial slump ended, orders are now running far ahead of sales, and management keeps raising guidance while calling it prudent. The next question is whether a record order book converts before the bill for the newest acquisitions lands. How fast has the record backlog converted into sales historically?
- The industrial slump is over, and this time every division is pulling.
EMG turned first, then EIG followed six to nine months later, exactly as management said it would. Orders have grown double digits four quarters running and organic orders hit 25% in Q2 FY2026, so the recovery is broad, not one division. How much of EIG's growth now comes from its process and power businesses?
- The story has shifted from recovery to infrastructure build-out.
Management now ties about half the business to AI, chip capacity, the power grid and defense modernization, and calls it early in a multiyear build. That stretches the runway past a normal cycle but leans on a few big customer budgets.
- Acquisitions are getting bigger and they drag reported profit.
FARO came in at mid-teen margins and takes years to reach 30%; Indicor, a $5 billion deal due in the second half, is far bigger than past buys. Reported margin stayed flat while core margin rose, so the cost lands before the profit does. How long until FARO and Indicor reach AMETEK's profit margins?
- Order growth outpaces salesOrders are growing considerably faster than sales in both segments, which management reads as the early stage of a multiyear build-out in power, defense and semiconductor capacity.
- Defense and aerospace demandAerospace and defense demand is supported by defense modernization budgets and a commercial aircraft order cycle whose backlog runs years out, and defense is the larger slice.
- Pricing covers costsPrice increases have recovered inflation and tariffs with room to spare, and the engineered, regulated nature of the products keeps customers from switching suppliers easily.
- Lumpy large contract awardsThe recent order surge includes several large contract awards, and management has said directly that order growth will not run at that pace every quarter.
- Dilution from acquisitionsAcquired businesses arrive with far lower margins than AMETEK earns, so the reported margin stays flat or slips even while the underlying business improves.
- Tariff and geopolitical riskTrade barriers and conflict in the Middle East can delay customer decisions and shipments, and nearly half of sales are made outside the United States.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Purchase | ≥$15K | Jun 23 | Aug 22 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 12 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 2 | May 13 |
Alan Armstrong Republican · Senate · OK | Purchase | ≥$1K | Mar 27 | Jul 21 |
Ro Khanna Democratic · House · CA-17 | Sale | ≥$1K | Jun 2 | Jul 6 |
Congressional trading data provided by QuiverQuant
How AMETEK turned $7.4B of revenue into $1.9B of operating income.
| Revenue | ||
|---|---|---|
| Electronic Instruments Group | $4.9B | ▲ 5.56% YoY |
| Electromechanical Group | $2.5B | ▲ 8.80% YoY |
| Total revenue | $7.4B | |
| Gross profit | $2.7B | 36.0% |
| Operating income | $1.9B | 25.8% |