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Carlisle Acquires Ecco Finishing, Strengthens CFT Segment

Zacks Equity Research

Carlisle Companies Incorporated CSL recently announced the buyout of a privately-held painting and sealing equipment manufacturer, Ecco Finishing.

Based in Skara, Sweden, Ecco Finishing is a developer of various products, which are utilized in various application settings mostlyin automotive, leather, wood & plastics and ceramics industries. Notably, Carlisle will work on integrating Ecco Finishing into its Carlisle Fluid Technologies (“CFT”) operating segment.

Acquisition Rationale

The acquisition complements Carlisle’s buyout of Integrated Dispense Solutions, Hosco Fittings and Shinhang so far in 2019.

As a matter of fact, Ecco Finishing’s solid technical resources and capabilities will help in boosting the company’s growth opportunities in CFT’s Sealants and Adhesives platform. Carlisle’s expanded product range, which when combined with CFT's commercial organization and application of the Carlisle Operating System (“COS”) will enable the company to boost innovation and lead to growth. This will also allow the company to cater to increasing demand.

Carlisle’s Expansion Plans

Carlisle intends to pursue growth and expansion of core business through acquisition of companies or assets that aid growth of its service offerings.

In this regard, the company’s buyout of Petersen Aluminum Corporation (in January 2019) is worth mentioning. The acquisition has been strengthening the company’s product offerings in the metal roofing platform. Further, this will enable Carlisle to easily penetrate the markets of Arizona, Texas, the Midwest and Georgia.

Notably, acquisitions contributed 3.9% of sales growth in the first quarter of 2019.

Existing Business Scenario

Carlisle has been gaining from its diversified business structure, which enables it to tap opportunities and neutralize operating risks associated with a single market. Of late, one of the company's major segments, Carlisle Construction Materials, has been witnessing significant improvement on account of solid organic growth, and high volume of reroofing projects in the North American non-residential construction markets.

In the past three months, this Zacks Rank #1 (Strong Buy) company has gained 7.5%, outperforming the industry’s rise of 0.2%.


 

In light of the continued operational improvements, including cost savings from the COS and overall positive market conditions, the company anticipates overall revenue growth to be in high single digits in 2019.

Other Stocks to Consider

Some other top-ranked stocks in the same space include Honeywell International Inc. HON, Crane Co. CR and HC2 Holdings, Inc. HCHC. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Honeywell surpassed estimates in each of the trailing four quarters, the average being 3.50%.

Crane exceeded estimates in each of the trailing four quarters, the average being 6.74%.

HC2 Holdings’ earnings surprise in the last reported quarter was 92.73%.

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