IDEX walked into its Q3 2026 release with a premium P/E tag and a stock that had edged higher over the past month. The earnings print then landed with a jolt. The share price climbed 2.3% on the day as investors reacted to record quarterly sales and a step up in earnings power.
For a company often viewed as a high quality industrial compounder, the real story this quarter sits in profitability. Adjusted earnings per share and net income both moved to new highs while free cash flow stayed strong. The gap between the rich valuation and the latest margin performance is what now matters most for you as a shareholder.
Love IDEX's record earnings power but uneasy about paying a premium P/E for it? Compare this quality compounder with other high return, strong balance sheet industrials using our list of solid balance sheet and fundamentals stocks (24 results)
Q3 2026 Earnings Summary
- Revenue (Q3 2026 vs Q3 2025): US$951.7 million vs. US$878.7 million (up 8.3%)
- Net Income, Excl. Extra Items (Q3 2026 vs Q3 2025): US$144.1 million vs. US$127.8 million (up 12.8%)
- Basic EPS (Q3 2026 vs Q3 2025): US$1.96 vs. US$1.70 (up 14.9%)
- Organic Revenue Growth (Q3 2026 vs Q3 2025): 8% increase, ahead of the prior 5% to 7% guidance range
Ask Charlie what makes IDEX’s ‘tunability’ so profitable.
HST Momentum And 80/20 Execution Put To Work
The bullish story hinges on IDEX turning HST exposure and the 80/20 playbook into real operating traction.
"Broader application of the 8020 methodology to concentrate capital and talent on higher value customers and acquired platforms, supported by HST margin flow through of about 40% year over year and segment EBITDA margin expansion of 270 basis points in Q2 2026, indicates additional room for net margin and EPS improvement."
Q3 results move this beyond theory. HST organic sales rose 13%, orders climbed 21%, and segment EBITDA margin reached 28.8%, up 110 bps. Company wide, adjusted EBITDA margin expanded and free cash flow conversion hit 124%, which aligns with the claim that this framework is now translating into higher quality earnings.
Legacy Pressure And Growth Durability Under Scrutiny
The bear story questions whether higher value niches can offset softer legacy areas over time.
"The company has increased its focus on higher value markets. At the same time, external research points to muted organic revenue and EPS growth and declining returns on capital over the past two years. If these legacy pressures persist despite the 8020 methodology and higher HST exposure, overall margins and earnings could fall short of expectations."
Q3 does not fully confirm that concern. Organic revenue grew 8%, adjusted EPS advanced 15%, and all segments reported margin expansion. That said, chemicals and agriculture inside FMT remain weak and life sciences in HST is flat, so older end markets still act as a drag even as the group level numbers improved this quarter.
That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for.
Hunt For Disconnects Before They Close
IDEX just showed how a strong quarter and premium P/E can still leave investors debating the story. The real opportunity sits in finding stocks that could be undervalued before the market corrects them.
- Company 1 - 34% below our estimate - uses expanded high-horsepower engine capacity and long-term data center contracts to deepen power generation relationships.
- Company 2 - 28% below our estimate - converts record manufacturing wins in regulated hardware programs into longer-lived production runs with tighter supply chain control.
- Company 3 - 46% below our estimate - turns a near record backlog of large, higher-margin infrastructure projects into construction work that throws off cash once disputes resolve.
Three companies from the same screener. Open every one of the 29 undervalued companies on it →
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