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Carlisle (CSL) to Benefit From Buyouts Amid Pandemic Scare

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On Dec 10, we issued an updated research report on Carlisle Companies Incorporated (CSL - Free Report) .

In the past three months, this Zacks Rank #3 (Hold) stock has returned 28% compared with the industry’s growth of 23.8%.

Present Scenario

Carlisle is poised to benefit from its exposure in diverse end markets along with the focus on improving operational efficiencies, product development and acquired assets in the quarters ahead. The company’s solid position in the robust U.S. reroofing market is likely to be beneficial for it over time. In addition, strength in medical end markets and the company’s initiatives to enhance capabilities at the medical technologies platform are likely to drive its performance.

Also, Carlisle intends to strengthen and expand its businesses through acquisitions. Its acquisition of Providien (November 2019) has been strengthening its medical technologies business. Also, the buyout of Ecco Finishing (July 2019) has been adding value to the Sealants and Adhesives business. Further, the Petersen acquisition (January 2019) expanded its product offerings in the metal roofing platform. Notably, acquisitions contributed 1.9% to revenue growth in both the second and third quarters of 2020.

In addition, it remains committed to rewarding shareholders handsomely through dividend payments and share buybacks. In the third quarter of 2020, Carlisle used $28.5 million for paying out dividends and repurchasing shares worth $149.9 million. Notably, the quarterly dividend rate was hiked by 5% in August 2020.

However, persistent weakness in the commercial aerospace, transportation and automotive refinish end markets amid the coronavirus outbreak remains concerning for its top-line performance in the near term. For the fourth quarter of 2020, the company expects overall revenues to decline in high single digit range on a year-over-year basis.

Moreover, Carlisle’s high-debt profile poses a concern. For instance, in the last five years (2015-2019), its long-term debt rose 22.5% (CAGR). Notably, its long-term debt balance (including current portion) was $2,080.3 million at the end of the third quarter of 2020, reflecting an increase of 30.7% from the 2019-end level. Also, net interest expenses in the quarter increased 13.8%. Any further increase in debt levels can raise the company’s financial obligations.

Stocks to Consider

Some better-ranked stocks from the same space are Danaher Corporation (DHR - Free Report) , ITT Inc. (ITT - Free Report) and 3M Company (MMM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Danaher delivered a positive earnings surprise of 17.00%, on average, in the trailing four quarters.

ITT delivered a positive earnings surprise of 22.39%, on average, in the trailing four quarters.

3M delivered a positive earnings surprise of 1.85%, on average, in the trailing four quarters.

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Carlisle Companies Incorporated (CSL) - free report >>

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