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Rexnord's (RXN) Buyout of Hadrian to Aid Zurn Product Lines

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Zacks Equity Research
·4 min read
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Rexnord Corporation RXN announced that it agreed to acquire Canada-based Hadrian Inc. Financial terms of the transaction have not been disclosed by the company.

It is worth noting here that Rexnord’s share price gained 2.77% on December 4, ending the trading session at $38.64.

Inside the Headline

Hadrian is a specialist in manufacturing locker products and washroom toilet partitions — including those made of solid plastic, stainless steel, powder-coated metal and embossed stainless steel. Also, it is working on anti-graffiti finishes and privacy solutions for washroom.

The products provided by Hadrian as well as its innovative technologies will add more value to Rexnord’s Zurn washroom-related product line. To be precise, the buyout will enable Zurn to progress on its commitment to offer advanced washroom solutions to building owners.

The buyout is anticipated to be completed by December-end.

Notably, Hadrian will form part of the company’s Zurn business under the Water Management segment. The division deals in products that help in the enhancement of water quality, safety, flow control and conservation. It serves customers in commercial construction, infrastructure construction and residential construction markets.

The Zurn product line includes building drainage, finish plumbing, water safety, touchless solutions, water control, and others. It has a healthy customer base in education, retail, government, healthcare, fire protection and other markets.

The Water Management segment’s revenues were $199.7 million in the quarter ended Sep 30, 2020. It represented 40.5% of total sales generated by Rexnord in the quarter.

Rexnord’s Buyout Activities

Acquiring businesses is a good mean for Rexnord to expand its product line, gain access to new markets and enhance customer base. In the quarter ended September 2020, acquisitions had a positive impact of 1% on the company’s sales.

In January 2020, Rexnord acquired Just Manufacturing Company — a manufacturer of plumbing fixtures and stainless steel sinks for customers in the commercial and institutional markets. The buyout was added to the Water Management segment and aided the company to provide efficient washroom solutions.

Zacks Rank, Estimate Trend and Price Performance

With a market capitalization of $4.7 billion, Rexnord currently carries a Zacks Rank #2 (Buy). Diversified business structure, supply-chain optimization and footprint-repositioning programs, solid operational execution, and shareholder-friendly policies are likely to benefit the company in the quarters ahead. However, challenges related to the pandemic might be concerning.

In the past three months, the company’s shares have gained 33.7% compared with the industry’s growth of 16.9%.




 

Meanwhile, the Zacks Consensus Estimate for its earnings is pegged at $1.77 for 2020 and $2.04 for 2021, reflecting growth of 8.6% and 6.3% from the respective 60-day-ago figures. Also, the consensus estimate for the fourth quarter of 2020 has grown 11.1% to 40 cents per share.

Rexnord Corporation Price and Consensus

 

Rexnord Corporation Price and Consensus
Rexnord Corporation Price and Consensus

Rexnord Corporation price-consensus-chart | Rexnord Corporation Quote

Other Stocks That Warrants a Look

Three other top-ranked stocks in the industry are II-VI Incorporated IIVI, Franklin Electric Co., Inc. FELE and Regal Beloit Corporation RBC. While II-VI currently sports a Rank #1 (Strong Buy), both Franklin Electric and Regal Beloit carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these companies have improved for the current year. Further, earnings surprise for the last reported quarter was 52.73% for II-VI, 25.76% for Franklin Electric and 39.52% for Regal Beloit.

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Regal Beloit Corporation (RBC) : Free Stock Analysis Report
 
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IIVI Incorporated (IIVI) : Free Stock Analysis Report
 
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