Graco Inc. (GGG), Colfax Corp (CFX): Mario Gabelli Likes This Industrial Equipment Maker

IDEX Corporation (NYSE:IEX) is the cheapest  among the three companies. At $56.80 per share, IDEX Corporation (NYSE:IEX) is worth around $4.6 billion. The market values IDEX Corporation (NYSE:IEX) at 11.3 times its trailing EBITDA. IDEX Corporation (NYSE:IEX), the provider of business solutions, offering pumps, flow meters and other fluidics systems, operating in three main segments: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products. For the full year, the company expected to grow its revenue organically by low-to-mid single digit rate, with the capital expenditure of around $40 million. With the operating margin of around 19%, its EPS estimate stayed in the range of $2.85 to $2.95 per share.

Among the three companies, while Colfax Corp (NYSE:CFX) does not offer investors dividends, Graco and IDEX Corporation (NYSE:IEX) pays its shareholders dividends with yields at 1.5% and 1.7%, respectively.

My Foolish take

Mario Gabelli said that Graco has wonderful management team. He said  earnings per share be able to rise to $5. With a simple P/E of 20, Graco could be worth $100 per share in three years time. Indeed, with the consistent positive cash flow generation and a reasonable leverage level, Graco seems to be a good business to hold in a long run. However, despite the $100 target price by Gabelli, I am personally not excited because of high EBITDA multiple. I would rather wait for price correction before initiating any long position in Graco.

The article Mario Gabelli Likes This Industrial Equipment Maker originally appeared on Fool.com is written by Anh Hoang.

Anh HOANG has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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