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Worthington (WOR) Divests Structural Composites to Luxfer

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Worthington Industries, Inc. WOR announced yesterday that it divested its Structural Composites Industries (“SCI”) business to Luxfer Holdings PLC on Mar 12. The transaction has been valued at $20 million in cash and is anticipated to be beneficial for both parties.

It is worth mentioning here that Worthington’s share price increased 0.2%, ending the trading session at $72.98.

Luxfer is a specialist in manufacturing industrial materials, including high-pressure gas containment devices, high-performance materials and components. Products produced are used in general industrial, healthcare, defense, transportation, emergency response and other end markets. The company is based in the U.K.

Inside the Headline

The SCI business of Worthington engages in manufacturing high-pressure cylinders that are primarily used for storing and transporting compressed natural gas and hydrogen as well as used in emergency escape equipment, firefighters’ breathing apparatus and others. Customers mainly come from military, aerospace and commercial end markets. The business operates through a facility based in Pomona, CA, and employs approximately 130 people.

As noted, the divestment was meant for getting rid of the loss-making business and concentrating on growing businesses in the mobility markets in Asia and Europe. Notably, it will continue to provide Self-Contained Breathing Apparatus cylinders to customers in Asia and Europe.

Worthington will record a loss of $7 million related to the divestment.

Worthington’s Inorganic Initiatives

We believe that the above-mentioned transaction is consistent with the company’s policy of strengthening the portfolio through inorganic moves, including divestments and acquisitions.

In February 2021, Worthington divested its oil & gas equipment business, located in Tulsa, OK, and Bremen, OH, to Ten Oaks Group’s affiliate. In the same month, the company acquired General Tools & Instruments Company LLC. The buyout is anticipated to strengthen Worthington’s outdoor and niche tools portfolio. In January 2021, Worthington added PTEC Pressure Technology GmbH to its portfolio.

Zacks Rank, Share Price Performance and Estimate Trend

With a market capitalization of $3.8 billion, Worthington currently carries a Zacks Rank #2 (Buy). In the past three months, the company’s share price has increased 44.3% compared with the industry’s growth of 24.1%.

In the past 60 days, the Zacks Consensus Estimate for Worthington’s earnings has been raised by 13.5% to $4.20 for fiscal 2021 (ending May 2021) and 10.9% to $3.55 for fiscal 2022 (ending May 2022). Also, the earnings estimate for the third quarter of fiscal 2021 (ended February 2021, results are awaited) is pegged at $1.25, suggesting an increase of 11.6% from the year-ago quarter’s reported figure.

Worthington Industries, Inc. Price and Consensus

Worthington Industries, Inc. Price and Consensus
Worthington Industries, Inc. Price and Consensus

Worthington Industries, Inc. price-consensus-chart | Worthington Industries, Inc. Quote

Other Stocks to Consider

Some other top-ranked stocks in the Zacks Industrial Products sector are NN, Inc. NNBR, The Timken Company TKR and Graco Inc. GGG. All these companies presently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 60 days, current-year earnings estimates for NN have been stable, while those for Timken and Graco have improved. Further, earnings surprise for the last four quarters, on average, was 324.11% for NN, 57.33% for Timken and 20.87% for Graco.

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Worthington Industries, Inc. (WOR) : Free Stock Analysis Report

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