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Carlisle Companies Incorporated CSL yesterday announced that it agreed to divest its Carlisle Brake & Friction (“CBF”) segment as part of its portfolio enhancement strategy. The other party to the transaction is Waukesha, WI-based CentroMotion.
It is worth mentioning here that Carlisle’s shares lost 0.9% yesterday, ending the trading session at $192.09.
CentroMotion engages in manufacturing and providing actuation, control and motion solutions. The solutions are primarily used in industrial, commercial vehicle, agriculture, construction and other end markets. Notably, the firm is One Rock Capital Partners, LLC’s portfolio company.
Inside the Headlines
Carlisle’s CBF segment offers innovative brake and friction system solutions for a wide range of motion-control applications. Its product portfolio includes clutch and transmission applications, industrial brake assemblies, hydraulic control products, and aftermarket replacement kits.
The segment generated $88.1 million in revenues in first-quarter 2021, reflecting year-over-year growth of 24.1% from the year-ago quarter. Results benefited from solid demand in agricultural off-highway and construction vehicle end markets. The segment’s sales accounted for 8.6% of the company’s total revenues in the first quarter.
As noted, Carlisle anticipates the divestiture to help it strengthen its shareholder value by simplifying its portfolio and strengthening building product businesses. Also, per the agreement signed, Carlisle will receive cash of $250 million at the completion of the transaction. Further, it is entitled to receive approximately $125 million if CBF achieves adjusted earnings before interest, tax, depreciation and amortization target set for 2021.
The completion of the transaction is subject to the receipt of regulatory clearances along with the fulfillment of other closing conditions. It is expected to be completed in third-quarter 2021.
Carlisle’s Other Inorganic Activities
Acquiring businesses is an effective way for the company to gain access to new markets, expand its product line and enhance its customer base. Then again, divestments help in strengthening shareholder value.
In the first quarter of 2021, the company’s revenues increased 0.4% year over year on the back of benefits from acquired assets.
In July 2020, Carlisle acquired Motion Tech Automation, LLC in a transaction valued at $33.3 million. The acquired business boosted the company’s portfolio through the addition of manufacturing services, sensors and others.
Zacks Rank, Price Performance and Estimate Trend
With a market capitalization of $10.1 billion, the company currently carries a Zacks Rank #3 (Hold). Efforts to boost operations in the medical technologies platform, strengthening of the infrastructure market in the United States and buyouts/divestment activities are likely to aid the company in the quarters ahead. However, end-market-related challenges are expected to be concerning.
In the past three months, the company’s stock has gained 29.8% compared with the industry’s growth of 9.3%.
The Zacks Consensus Estimate for Carlisle’s earnings is pegged at $8.59 for 2021 and $10.41 for 2022, reflecting growth of 8.3% and 8% from the 30-day-ago figures. Also, the consensus estimate for second-quarter 2021 earnings of $2.29 reflects growth of 8% from the 30-day-ago figure.
Carlisle Companies Incorporated Price and Consensus
Carlisle Companies Incorporated price-consensus-chart | Carlisle Companies Incorporated Quote
Stocks to Consider
Three better-ranked stocks in the industry are Griffon Corporation GFF, Crane Co. CR and ITT Inc. ITT. While Griffon presently sports a Zacks Rank #1 (Strong Buy), both Crane and ITT carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for the companies have improved for the current year. Also, earnings surprise for the last reported quarter was 50.00% for Griffon, 26.72% for Crane and 21.84% for ITT.
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