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Carlisle (CSL) Rises 41% YTD: What's Driving the Stock?

Zacks Equity Research

Price performance of Carlisle Companies Incorporated CSL has been impressive since the beginning of 2019, which is evident from 40.9% gain in its shares. Solid financial performances, healthy fundamentals and future growth opportunities supported positive market sentiments for this stock.

The Scottsdale, AZ-based company belongs to the Zacks Diversified Operations industry. It currently carries a Zacks Rank #2 (Buy). The company’s earnings in the next five years are predicted to rise 15%, way higher than the industry’s 9.6%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, Carlisle has outshined its industry’s growth of 14.1% and the S&P 500’s improvement of 15%.

It is worth mentioning here that the company has reported better-than-expected results for three quarters in a row so far in 2019. Average positive earnings beat for these three quarters (including the fourth quarter of 2018 and the first two quarters of 2019) was 22.88%. Notably, its earnings in the last reported quarter surpassed estimates by 11.02%.

Factors Driving the Stock

We believe that some broader factors are playing key roles in Carlisle’s success. Rising global demand for air travel, demand from defense and governmental fronts, infrastructure development, technological upgrade in manufacturing processes, and changes in tax policies are benefiting the industry players. Such tailwinds placed the industry in top 7% (with the rank of 19) of more than 250 Zacks industries. The industry’s current growth estimates for earnings is pegged at 7.94%.

Narrowing down on company-specific factors, it is gaining from solid product demand, a diversified business structure and healthy global footprint. Growth opportunities within the North American non-residential construction market as well as space, defense, medical and aerospace markets are beneficial too. To add, the company’s efforts to enhance capabilities at the medical technologies platform is boon.

In addition, shareholder-friendly policies raise the stock’s attractiveness. Dividend payments and stock buybacks are popular ways of boosting stakeholders’ wealth. Notably, the quarterly dividend rate has been hiked by 25% in August 2019 while an additional buyback program for 5 million shares was announced in February this year.

Acquisitive nature of Carlisle has been boosting growth opportunities. So far in 2019, the company acquired Petersen Aluminum Corporation in January, strengthening its metal roofing platform and allowing easy penetration in markets of Arizona, Texas, the Midwest and Georgia. In May, the company acquired MicroConnex. The buyout is helping Carlisle to add key sensor and micro flex circuit technology to its medical technologies platform.  Also, buyouts of Hosco Fittings and Integrated Dispense Solutions will likely boost Carlisle’s growth prospects. Further, Ecco Finishing was bought in July, adding values to the company’s sealants and adhesives platform.

Earnings estimates for Carlisle have been raised in the past 60 days, reflecting positive sentiments about its growth prospects. Currently, the Zacks Consensus Estimate for its earnings is pegged at $8.13 for 2019 and $8.99 for 2020, reflecting growth of 4% and 3.5% from the respective 60-day-ago figures.

Carlisle Companies Incorporated Price and Consensus


Carlisle Companies Incorporated Price and Consensus

Carlisle Companies Incorporated price-consensus-chart | Carlisle Companies Incorporated Quote

Carlisle’s Performance Versus Three Peers

Carlisle has outperformed many industry peers so far in 2019. Three such stocks are Danaher Corporation DHR, Honeywell International Inc. HON and United Technologies Corporation UTX, with respective year-to-date gains of 34.7%, 23.9% and 21.7%.

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