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Kadant's (KAI) Buyout of Clouth to Enhance Product Offerings

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Kadant Inc. (KAI - Free Report) , on Jun 17, announced that it has entered into a deal to buy Joh. Clouth GmbH & Co. KG, along with its affiliates (“Clouth”). The buyout, which is expected to be completed in the third quarter of 2021 subject to certain regulatory approvals, is valued at about €78 million in cash.

Kadant’s shares declined 2.3% in the past couple of days to eventually close the trading session at $169.08 on Friday.

Inside the Headlines

Hückeswagen, Germany-based Clouth is engaged in manufacturing doctor blades and related equipment. The company’s products and services are sold across more than 70 countries in the world, supported by an extensive network of commercial representatives. Notably, in 2020, the company generated revenues of about €41 million.

The acquisition will enable Kadant to strengthen its position in the paper, packaging and tissue industry across Europe, North America and Asia. Notably, the addition of Clouth’s strong portfolio of products is likely to enable Kadant to provide a comprehensive line of doctor blades solution to its customers.

On completion of the deal, Clouth will be incorporated into Kadant’s Flow Control operating segment. Notably, the Flow Control segment is the provider of custom-engineered products, systems and technologies that are used for controlling the flow of fluids in commercial and industrial applications. In first-quarter 2021, the segment reported revenues of $63.8 million, reflecting growth of 11.7% on a year-over-year basis.

Zacks Rank, Price Performance and Estimate Revisions

Kadant, with approximately $2 billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is likely to benefit from solid portfolio of products and solutions, acquired assets and improving market conditions. However, high costs and expenses are concerns.   

In the past six months, the company’s share price has increased 22.5% compared with the industry’s growth of 9.3%.

Zacks Investment ResearchImage Source: Zacks Investment Research

The Zacks Consensus Estimate for its earnings is pegged at $6.07 for 2021, up 4.1% from the 60-day-ago figure. The consensus estimate for 2022 earnings is pegged at $6.67, up 1.8% over the same time frame.

Stocks to Consider

Some better-ranked stocks from the same space are Dover Corporation (DOV - Free Report) , EnPro Industries, Inc. (NPO - Free Report) and Helios Technologies, Inc. (HLIO - 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.

Dover delivered an earnings surprise of 21.35%, on average, in the trailing four quarters.

EnPro delivered an earnings surprise of 319.18%, on average, in the trailing four quarters.

Helios delivered an earnings surprise of 50.69%, on average, in the trailing four quarters.

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