Back to top

Image: Bigstock

EnPro Industries' (NPO) NxEdge Buyout to Boost Its Prospects

Read MoreHide Full Article

EnPro Industries, Inc. (NPO - Free Report) announced that it agreed to acquire NxEdge, Inc. in a cash transaction worth $850 million. The other party to the buyout is Trive Capital. The announcement came on the same day the company delivered better-than-expected results for the third quarter of 2021. Earnings beat in the quarter was 6.06%.

On Friday, EnPro Industries’ shares gained 8.73%, ending the trading session at $100.23.

Boise, ID-based, NxEdge engages in various businesses, including manufacturing, coating, cleaning, and refurbishment, in the semiconductor value chain. It has six facilities in California and Idaho, and its customers primarily include original equipment manufacturers and integrated device manufacturers.

In 2021, NxEdge is anticipated to generate revenues of $190 million and earnings before interest, tax, depreciation and amortization (EBITDA) of $70 million.

Inside the Headlines

With the addition of NxEdge, EnPro Industries is well-positioned to leverage the benefits of its extended product and service offerings, customer base, and aftermarket exposure. Also, the buyout will enhance EnPro’s manufacturing and coating capabilities, and revenue base.

Overall, EnPro Industries anticipates strengthening its foothold in the semiconductor value chain. The company expects to fund the buyout with revolving credit facilities, term loans and available cash.

Subject to the fulfillment of regulatory approvals and the satisfaction of closing conditions, the company anticipates the buyout to be completed by 2021-end. Upon the buyout completion, the acquired assets will be integrated with the Advanced Surface Technologies (“AST”) segment of EnPro Industries.

Talking about the financial gains, EnPro Industries predicts the NxEdge buyout to boost its revenues immediately as well as enhance its EBITDA margin and adjusted earnings per share. EnPro Industries anticipates an earnings contribution of $1.71 per share from the NxEdge buyout in 2022.

Zacks Rank, Price Performance and Earnings Estimate Trend

With a market capitalization of $2.1 billion, EnPro Industries currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from solid product offerings, acquired assets and divestments, and pricing initiatives. Supply-chain woes and inflationary issues are prevailing headwinds.

For 2021, the company revised its revenue projection to $1.085-$1.120 billion from the previously mentioned $1.075-$1.125 billion. Adjusted earnings are expected to be $5.35-$5.55 per share compared with the previously stated $5.16-$5.50.

In the past three months, the company’s shares have gained 16.6% against the industry’s decline of 1.1%.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

The Zacks Consensus Estimate for EnPro Industries’ earnings is pegged at $5.47 for 2021 and $6.03 for 2022, suggesting no change from the respective 60-day-ago figures. The earnings estimates for the fourth quarter of 2021 are unchanged at $1.22.

EnPro Industries Price and Consensus

 

EnPro Industries Price and Consensus

EnPro Industries price-consensus-chart | EnPro Industries Quote

Stocks to Consider

Some better-ranked stocks in the Zacks Industrial Products sector are Casella Waste Systems, Inc. (CWST - Free Report) , Heritage-Crystal Clean, Inc. (HCCI - Free Report) , and Applied Industrial Technologies, Inc. (AIT - Free Report) . While Casella Waste and HeritageCrystal currently sport a Zacks Rank #1, Applied Industrial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for the companies improved for the current year. Earnings surprise in the last reported quarter was 25.93% for Casella Waste, 33.90% for HeritageCrystal, and 14.29% for Applied Industrial.