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Colfax (CFX) Plans to Split Businesses Into Separate Companies

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Colfax Corporation (CFX - Free Report) on Mar 4 announced its plan to split up its fabrication technology and medical technology businesses into two separate companies. Notably, this separation, which is expected to close in the first quarter of 2022, is planned to be carried out following a tax-free method.

The company’s fabrication technology business deals with products like welding equipment, cutting equipment, automated welding and cutting systems, and consumables. The business sells its products under the ESAB brand. Its medical technology business is a provider of medical technologies related to the orthopedic field. Its major brands include Aircast, DonJoy and ProCare among others.

About the Spin-Off

As noted by the company, both of its businesses carry potential business opportunities across their respective end-markets. Colfax believes that the separation will unlock significant values for each of its businesses, enabling them to deliver high growth, strong free cash flow and margin expansion. Notably, with the separation, both businesses are anticipated to operate with unique business models, enhanced operating flexibility and sound capital-deployment strategies. The fabrication technology company’s headquarter will remain in Maryland while the medical technology company will be based at Wilmington, Delaware.

It’s worth mentioning here that Colfax’s shares have gained 10.1% in the past couple of days to eventually close the trading session at $49.75 on Friday.

Zacks Rank, Price Performance and Estimate Revisions

Colfax with $5.9 billion market capitalization currently carries a Zacks Rank #3 (Hold). The company is likely to benefit from its focus on product innovation, solid business portfolio and a healthy business system in the quarters ahead. However, uncertainties related to the coronavirus pandemic might affect its performance.

The Zacks Consensus Estimate for Colfax’s earnings is pegged at $2.13 for 2021, up 5.4% from the 30-day-ago figure.

The company’s shares have gained 32.2% compared with 4% growth recorded by the industry in the past three months.

Key Picks

Some better-ranked companies from the same space are EnPro Industries, Inc. (NPO - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and Dover Corporation (DOV - Free Report) . While EnPro currently sports a Zacks Rank #1 (Strong Buy), Applied Industrial and Dover carry a Zacks Rank #2 (Buy), presently. You can see the complete list of today’s Zacks #1 Rank stocks here.

EnPro delivered a positive earnings surprise of 310.81%, on average, in the trailing four quarters.

Applied Industrial delivered a positive earnings surprise of 21.92%, on average, in the trailing four quarters.

Dover delivered a positive earnings surprise of 20.01%, on average, in the trailing four quarters.

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