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Helios (HLIO) Closes NEM Buyout, Boosts Hydraulics Prospects

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Helios Technologies, Inc. (HLIO - Free Report) announced that it successfully closed the acquisition of Italy-based NEM S.r.l. The parties involved kept the financial terms of the buyout under wraps.

The agreement related to the buyout was signed on Jun 14.

NEM specializes in providing hydraulic solutions to be used for construction, material handling, agriculture and industrial vehicle purposes. It has a solid customer base in various regions, especially Asia and Europe.

Inside the Headlines

Helios anticipates that the NEM buyout will expand its manufacturing capabilities, presence in the OEM market and geographical reach (especially in Europe). Offerings in the electro-hydraulics market will get a boost too. NEM will complement Helios’ Cartridge Valve Technology (“CVT”) offerings, especially for customers in agriculture machinery, material handling, industrial and construction markets.

The assets acquired are now part of Helios’ Hydraulics segment. The segment offers quick-release hydraulic coupling solutions, cartridge valve technology products and hydraulic system design solutions. Brands offered by the segment are Custom Fluidpower, Sun Hydraulics and Faster.

In first-quarter 2021, the Hydraulics segment’s sales expanded 15% year over year to $119.1 million, driven by solid demand in agriculture and construction markets of the Asia Pacific, and Europe, Middle East, and Africa (“EMEA”) regions. However, weakness in the America business was spoilsport. It represented 58.2% of the company’s first-quarter revenues.

Helios’ Buyout Activities

Acquiring businesses are effective ways for the company to gain access to new markets, expand its product line and enhance the customer base. It invested $1 million on business acquisitions (net of cash acquired) in the first quarter of 2021.

In May 2021, the company signed an agreement with China-based Shenzhen Joyonway Electronics & Technology Co., Ltd. to acquire the latter’s electronic control systems and parts business. The financial terms of the definitive deal have been kept under wraps. The acquired business, to be integrated with the Electronics segment, is anticipated to solidify Helios’ offerings in the electronic controls platform. Completion of the deal is expected in third-quarter 2021.

In January, Helios acquired assets of the engineering solution provider, BJN Technologies, LLC. The latter is based in San Antonio, TX. The assets were integrated with Helios’ Electronics segment.

Zacks Rank, Price Performance and Estimate Trend

With a $2.6-billion market capitalization, Helios currently carries a Zacks Rank #2 (Buy). The company is benefiting from its diversification strategy, healthy demand, buyout activities and focus on capacity expansion.

In the past three months, its shares have gained 10.2% as compared with the industry’s decline of 0.1%.


Zacks Investment Research
Image Source: Zacks Investment Research


Meanwhile, the Zacks Consensus Estimate for its earnings is pegged at $3.40 for 2021 and $3.83 for 2022, reflecting growth of 2.1% and 1.3% from the respective 60-day-ago figures. Also, second-quarter earnings estimates of 86 cents represent an increase of 1.2% from the 60-day-ago figure.

Helios Technologies, Inc Price and Consensus


Helios Technologies, Inc Price and Consensus

Helios Technologies, Inc price-consensus-chart | Helios Technologies, Inc Quote

Other Stocks to Consider

Some other top-ranked stocks in the industry are Nordson Corporation (NDSN - Free Report) , The Middleby Corporation (MIDD - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) . While Nordson and Middleby currently sport a Zacks Rank #1 (Strong Buy), Applied Industrial carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these companies have improved for the current year. Further, positive earnings surprise for the last reported quarter was 28.48% for Nordson, 9.82% for Middleby and 35.64% for Applied Industrial.