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Brady (BRC) Buys UK-Based Magicard, Expands Presence

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·3 min read
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Brady Corporation BRC recently acquired Weymouth, the United Kingdom-based Magicard Limited. The buyout, which is valued at $59 million, is likely to be financed through the company’s overseas cash. Notably, Brady’s shares gained 1.1% yesterday to eventually close the trading session at $56.22.

Magicard is engaged in providing identification card printers, TrustID desktop ID card issuance software as well as Securicards smart cards. The company’s card printers are well-recognized for their built-in card security features, and the ability to encode smart cards in-line with printing. Its products are used in more than 100 countries in schools, corporates, governments and infrastructure facilities. Notably, the company’s projected sales stands at about $32 million for the year ending Dec 31, 2021.

Buyout Details

With the buyout, Brady will be able to leverage Magicard’s strong expertise in ID card-printing technologies, which will help it in strengthening its position in card printing and encoding industry. Magicard’s complementary product line will enable Brady to expand its product offerings across a wider customer base throughout the Americas, Asia and Europe.

Brady anticipates the transaction to be accretive to earnings per share marginally (eliminating one-time costs related to the acquisition) for the remainder of fiscal 2021 (ending July 2021).

Zacks Rank, Price Performance and Estimate Revisions

Brady, with approximately $2.9 billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is well poised to gain from improving market conditions along with solid product offerings, investments in sales and marketing as well as research and development in the quarters ahead. However, lingering effects of the coronavirus outbreak might affect its performance.

In the past three months, the company’s share price has increased 5% compared with the industry’s growth of 6.5%.

The Zacks Consensus Estimate for the company’s earnings is pegged at $2.60 for fiscal 2021, up 1.2% from the 30-day-ago figure. The consensus estimate for fiscal 2022 (ending July 2022) earnings is pegged at $2.85, stable over the same time frame.

Stocks to Consider

Some better-ranked stocks are Allegion plc ALLE, Johnson Controls International plc JCI and Lakeland Industries, Inc. LAKE, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Allegion delivered an earnings surprise of 25.16%, on average, in the trailing four quarters.

Johnson Controls delivered an earnings surprise of 12.93%, on average, in the trailing four quarters.

Lakeland delivered an earnings surprise of 230.73%, on average, in the trailing four quarters.

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Zacks Investment Research