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Helios (HLIO) to Buy Electronic Controls Business of Joyonway

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  • HLIO
  • MIDD

Helios Technologies, Inc. HLIO yesterday announced that it signed an agreement with China-based Shenzhen Joyonway Electronics & Technology Co., Ltd. to acquire the latter’s electronic control systems and parts business.

Notably, the financial terms of the definitive deal have been kept under wraps.

Joyonway specializes in manufacturing and providing software, control panels, accessories and systems for use in the health and wellness industry. It has operations in China’s well-known electronics and software hub of Dongguan and Shenzhen.

Inside the Headlines

As noted, the above-mentioned buyout is anticipated to solidify Helios’ offerings in the electronic controls platform. In addition, the company’s manufacturing capabilities, supply chain and geographical reach are anticipated to get a boost from the buyout.

Notably, the assets to be acquired will be integrated with Helios’ Electronics segment. The segment engages in manufacturing displays, instrumentation products, controls, engines and other products for industrial and commercial applications. Also, it has a solid presence in the health and wellness markets.

The segment’s sales expanded 234% year over year to $85.7 million in the first quarter of 2021, driven by solid product offerings as well as strengthening demand in recreational and health & wellness markets. Synergistic gains from the Balboa buyout also boosted results. It represented 41.9% of the company’s first-quarter revenues.

Subject to the satisfaction of pre-closing conditions, the buyout is anticipated to close in the third quarter of 2021.

Helios’ Buyout Activities

Acquiring businesses is an effective way for the company to gain access to new markets, expand its product line and enhance customer base. In first-quarter 2021, it invested $1 million on the acquisition of businesses (net of cash acquired).

In January 2021, Helios acquired assets of the engineering solution provider, BJN Technologies, LLC. The latter is based in San Antonio, TX. The assets were integrated with Helios’ Electronics segment.

Also, Helios acquired Costa Mesa, CA-based BWG Holding I Corp. (or Balboa Water Group) in November 2020. The latter specializes in making electronic controls for the health and wellness markets. The acquired business is now part of Helios’ Electronic segment.

Zacks Rank, Price Performance and Estimate Trend

With a $2.5-billion market capitalization, Helios currently carries a Zacks Rank #4 (Sell). The company faces headwinds from higher freight and raw material costs as well as supply-chain constraints.

In the past three months, the company’s shares have gained 23.6% as compared with the industry’s growth of 14.9%.

Meanwhile, the Zacks Consensus Estimate for its earnings is pegged at $3.01 for 2021 and $3.48 for 2022, reflecting declines from the respective 60-day-ago figures of $3.02 and $3.49.

Helios Technologies, Inc Price and Consensus

Helios Technologies, Inc Price and Consensus
Helios Technologies, Inc Price and Consensus

Helios Technologies, Inc price-consensus-chart | Helios Technologies, Inc Quote

Stocks to Consider

Some better-ranked stocks in the industry are Tennant Company TNC, The Middleby Corporation MIDD and Barnes Group, Inc. B. While both Tennant and Middleby sport a Zacks Rank #1 (Strong Buy), Barnes carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for the companies have improved for the current year. Also, its earnings surprise for the last reported quarter was 82.81% for Tennant, 9.82% for Middleby and 22.58% for Barnes.

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