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Carlisle (CSL) Displays Bright Prospects Despite Persistent Risks

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On Mar 12, we issued an updated research report on Carlisle Companies Incorporated (CSL - Free Report) .

In the past six months, this Zacks Rank #3 (Hold) stock has gained 28.6% compared with the industry’s growth of 25.7%.

Existing Business Scenario

Carlisle is well poised to benefit from a robust and strengthening reroofing market in the United States. Also, a growing small to medium-sized reroofing market in Europe bodes well for the company. In addition, strength in the company’s medical business along with its initiatives to enhance capabilities at the medical technologies platform bodes well.

The company intends to solidify its product portfolio and leverage business opportunities through the addition of assets. For instance, the company’s acquisition of the Ecco Finishing business (July 2019) has boosted its growth opportunities in the Sealants and Adhesives platforms. Moreover, Carlisle's Providien buyout (November 2019) has strengthened its medical technologies platform. Notably, in the third and fourth quarters of 2020, acquisitions had a contribution of 1.9% and 1.4% in revenue growth, respectively.

Moreover, the company believes in rewarding shareholders handsomely through dividend payouts and share repurchases. For instance, in 2020, the company distributed dividends totaling $112.4 million and repurchased shares worth $382.4 million. It’s worth noting here that it hiked the quarterly dividend rate by 5% to 52.5 cents in August 2020.

However, persistent weakness in the commercial aerospace business due to lower global air transport operations might adversely impact the company’s top-line performance in the quarters ahead. Also, a challenging demand environment across its general industrial end markets remains concerning for the near term.

Further, high debts can increase its financial obligations and, in turn, hurt profitability. Carlisle’s long-term debt increased 28.4% (CAGR) over the last five years (2016-2020). Exiting 2020, the metric stood at $2,081.3 million, reflecting a marginal sequential increase and a surge of 30.8% from the 2019-end level.

Stocks to Consider

Some better-ranked stocks from the same space are Griffon Corporation (GFF - Free Report) , Crane Co. CR and Danaher Corporation (DHR - 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.

Griffon delivered an earnings surprise of 115.48%, on average, in the trailing four quarters.

Crane delivered an earnings surprise of 12.37%, on average, in the trailing four quarters.

Danaher delivered an earnings surprise of 19.86%, on average, in the trailing four quarters.

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