How IDEXX Stock Is Engineered To Make Money For You
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Shares of IDEXX Laboratories (IDXX) have jumped 32.4% since October 7, including a 21.8% gain on November 2, when the company reported third-quarter results and raised its outlook, though the stock remains down 7.1% over the past year. The company consistently repurchased its own stock over the past three years, reducing its diluted share count to 79.0 million from 84.0 million. What has that shrinking count added to each share you hold?
IDEXX’s Earnings Per Share Grew Faster Than Net Income
Each remaining share now claims a larger slice of a growing profit. Earnings per share at IDEXX grew 14.8% annually over the three years to September 2026, compared with a 12.8% annual pace for net income. With the share count falling in every one of those years, about 2 percentage points of annual per-share growth came from the smaller count rather than business expansion.
IDEXX stock is not cheap today, trading at 44.7 times earnings against 22.9 for the S&P 500. Share repurchases over the past four quarters, minus the cost of stock paid to employees, totaled 1.9% of its market value at the November 5 close.
IDEXX Pays For Its Buyback With Pet Diagnostics Cash
IDEXX funds the buyback using cash generated by its pet business. The Companion Animal Group generated $3.95 billion of the company’s $4.3 billion revenue in fiscal 2025. After IDEXX installs analyzers in veterinary clinics, those practices continue paying for the tests run on the machines and for work sent to the company’s reference labs.
The business is highly profitable, generating an operating margin of 32.3% over the past four quarters against 18.9% for the S&P 500. During that period, the company produced $1.3 billion of free cash flow, the cash remaining after capital spending, and allocated $1.05 billion to buybacks. IDEXX paid no dividend, so the cash it produced more than covered everything returned to shareholders. The company avoided borrowing to fund the buyback, reducing total debt to $0.973 billion at the end of September 2026 from $1.11 billion a year earlier.
Can IDEXX Keep The Buyback Going?
The company’s balance sheet and outlook for 2026 suggest IDEXX can sustain the repurchases, even though only the fourth quarter of 2026 remains in that forecast period. Management expects free cash flow to equal 95% to 100% of net income for 2026, and on its November 2, 2026 call raised the full-year outlook for revenue and earnings per share. The debt load is light. Net of cash, debt amounts to less than half of one year’s earnings before interest, taxes, depreciation and amortization, and operating profit covered interest costs 43.5 times over the past four quarters.
Light debt is an edge when money tightens. Cash beats debt: rule one of investing for a crash and a rally.
The risk to all of this lies in U.S. vet clinics. Management said on the call that same-store clinical visits in the U.S. fell an estimated 1.8% in the third quarter, adding that the economy remains a challenge. Growth at IDEXX does not rely on more visits, management says, because clinics are running more tests per visit, and the company’s recurring diagnostics revenue still grew 11% organically in the quarter.
A slowdown in those recurring tests, sold by IDEXX’s largest business, could stop the buyback. Growth in that recurring diagnostics revenue is the measure to watch when IDEXX next reports, expected in February 2027.
Now You Know IDEXX Laboratories. Here Is A Better Way To Invest
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