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Standex (SXI) Acquires Renco Electronics for $28M in Cash

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Standex International Corporation (SXI - Free Report) yesterday announced that it bought Renco Electronics. The transaction was valued at $28 million, financed with available cash. In addition to the cash portion, the transaction has certain earnout payments applicable for three years and conditioned upon the fulfillment of some financial targets.

The privately held Renco Electronics specializes in making coils, inductors, magnetic components, chokes and transformers. The products are mainly used in aerospace, consumer, military and industrial markets. It has manufacturing units in Asia and Rockledge.

Renco Electronics is headquartered in Rockledge, FL. The company generated revenues of $28 million in the trailing 12 months. Its employee strength is 120.

Discussion on Buyout

As noted, the addition of Renco Electronics will strengthen Standex’s effort to expand its geographical presence, boost its product offerings, and enhance technical and engineering capabilities. Also, solid customer base of Renco Electronics and its presence in multiple end markets will prove to be a boon for Standex.

In the first year of the completion, the buyout is anticipated to boost Standex’s earnings and consolidated free cash flow.

Standex’s Buyout Initiatives
 
The above-mentioned transaction is consistent with Standex’s policy of acquiring businesses or divesting non-core assets to improve its growth opportunities.

In fiscal 2019 (ended June 2019), the company acquired Ohio-based Genius Solutions Engineering Company and integrated into its Engraving segment. Also, it bought and added New Hampshire-based Regional Mfg. Specialists, Inc. to its Electronics segment. In fiscal 2020 (ended June 2020, results are awaited), the company acquired Michigan-based Tenibac-Graphion Inc. The buyout was added to the Engraving segment.
 
Zacks Rank, Price Performance and Estimate Trend

Standex currently carries a Zacks Rank #3 (Hold).

In the past three months, the company’s shares have gained 23.2% compared with the industry’s growth of 21.9%.




 

Also, the Zacks Consensus Estimate for its earnings per share is pegged at 85 cents for first-quarter fiscal 2021 (ending September 2020) and $4.01 for fiscal 2021 (ending June 2021), marking declines of 19.8% and 10.9% from the respective 60-day-ago figures.

Standex International Corporation Price and Consensus

 

Standex International Corporation Price and Consensus

Standex International Corporation price-consensus-chart | Standex International Corporation Quote

Further, the consensus estimate for fourth-quarter fiscal 2020 (ended June 2020, results are awaited) earnings is pegged at 60 cents, higher than 70 cents mentioned 60 days ago.

Stocks to Consider

Some better-ranked stocks in the Zacks Industrial Products sector are II-VI Incorporated , The Middleby Corporation (MIDD - Free Report) and Altra Industrial Motion Corp. . While II-VI currently sports a Zacks Rank #1 (Strong Buy), both Middleby and Altra Industrial carry 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 these companies improved for the current year. Further, earnings surprise for the last reported quarter was 213.33% for II-VI, 12.31% for Middleby and 47.73% for Altra Industrial.

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