Carrier (CARR) Strengthens Portfolio With Latest Divestiture
Carrier Global CARR has been focusing on strengthening its portfolio with the divestiture of non-core assets. The company recently announced back-to-back divestiture of its commercial refrigeration and security businesses.
Carrier is selling the commercial refrigeration business (cabinets) to its long-time joint venture partner Haier for an enterprise value of $775 million, including roughly $200 million of net pension liabilities. This represents about 16.5 times of 2023 expected EBITDA. The transaction is expected to close in the second half of 2024.
Last week, Carrier announced the sale of its security business, Global Access Solutions, to Honeywell for $4.95 billion. This reflects approximately 17 times the 2023 expected EBITDA.
Net proceeds from the commercial refrigeration deal are expected to exceed $500 million, while the figure from the security business is expected to be more than $4 billion. Carrier plans to use the net proceeds to settle some of its debts.
As of Sep 30, 2023, the company had a total debt of $8.79 billion compared with $8.8 billion as of Jun 30, 2023. Cash and cash equivalents were $3.9 billion as of Sep 30 compared with $3.21 billion as of Jun 30, 2023.
Carrier Global Corporation Price and Consensus
Carrier Global Corporation price-consensus-chart | Carrier Global Corporation Quote
Carrier shares have returned 8.1% in the past three months, outperforming the Zacks Computer and Technology sector’s rise of 7.8%.
Carrier’s Reorganization to Boost Prospect
Carrier is putting more focus on expanding its intelligent climate and energy solutions. As part of the transformation strategy, the company bought Viessmann Climate Solutions and expects to close the acquisition in the first week of 2024.
Viessman expands Carrier’s footprint in Europe as it provides solutions for all energy classes, including heat pumps, gas boilers and hydrogen boilers.
Carrier’s 2023 guidance remains robust thanks to portfolio strength. It expects sales in the band of $22.1-$22.2 billion with mid-single-digit organic sales growth. The Zacks Consensus Estimate for the same is pegged at $22.25 billion, suggesting growth of 8.94%.
Carrier expects organic sales growth in the container business, commercial refrigeration and the entire Refrigeration segment.
CARR anticipates earnings of nearly $2.70 per share. The Zacks Consensus Estimate for the same is pegged at $2.72.
The company expects to generate slightly more than $1.9 billion of free cash flow in 2023.
Zacks Rank & Stocks to Consider
Carrier currently has a Zacks Rank #3 (Hold).
Flex FLEX, Badger Meter BMI and Ceridian HCM CDAY are some better-ranked stocks in the broader sector, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Flex shares have gained 29.7% in the past year. The long-term earnings growth rate is pegged at 12.39%.
Badger Meter shares have gained 42.6% in the past year. The long-term earnings growth rate is pegged at 20.39%.
Ceridian shares have gained 8.7% over the same timeframe. The long-term earnings growth rate is pegged at 44.15%.
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