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Kadant (KAI) to Acquire Key Knife & Boost Product Portfolio
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Kadant Inc. (KAI - Free Report) recently announced that it has signed a definitive deal to acquire Key Knife, Inc. and its affiliates for about $156 million in cash. Kadant is expected to fund the transaction through borrowings under its revolving credit facility.
KAI’s shares inched down 0.4% yesterday to eventually close the trading session at $284.23.
Based in Tualatin, OR, Key Knife is engaged in producing and supplying custom chipping, flaking and planing solutions to the wood products industry across the world. Its innovative knife systems allow wood processing mills to boost product quality, fiber recovery and output, and reduce operating expenses. Key Knife generated revenues of roughly $65 million in the trailing twelve months ended Sep 30, 2023.
Acquisition Rationale
The latest buyout is in sync with Kadant’s policy of acquiring businesses to strengthen its business and product portfolio. The inclusion of Key Knife’s solid aftermarket business, supported by its strong designing and manufacturing capabilities of knife systems, will enable KAI to expand its customer offerings and boost its position in wood processing industries. It will incorporate Key Knife into its Industrial Processing segment.
Management expects the transaction to be completed in early January 2024, conditioned on the fulfillment of certain customary closing conditions.
Zacks Rank & Price Performance
Kadant, with a $3.3 billion market capitalization, currently carries a Zacks Rank #2 (Buy). The company is likely to benefit from solid demand for both aftermarket parts and capital equipment, contribution from organic assets and focus on operational execution.
Image Source: Zacks Investment Research
The company’s shares have gained 26% compared with the industry’s growth of 16.2% in the past three months.
The Zacks Consensus Estimate for KAI’s current-year earnings has improved 5.2% over the last 60 days. It has a trailing four-quarter average earnings surprise of 17.3%.
Applied Industrial delivered a trailing four-quarter average earnings surprise of 13.9%. In the past 60 days, the consensus estimate for AIT’s 2023 earnings has improved 1.8%. The stock has risen 12.7% in the past three months.
Crane delivered a trailing four-quarter average earnings surprise of 29.8%. In the past 60 days, the Zacks Consensus Estimate for CR’s 2023 earnings has remained stable. Shares of CR have rallied 36.3% in the past three months.
Flowserve has a trailing four-quarter average earnings surprise of 27.3%. The consensus estimate for FLS’ 2023 earnings has inched up 1% in the past 60 days. Shares of the company have increased 6.8% in the past three months.
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Kadant (KAI) to Acquire Key Knife & Boost Product Portfolio
Kadant Inc. (KAI - Free Report) recently announced that it has signed a definitive deal to acquire Key Knife, Inc. and its affiliates for about $156 million in cash. Kadant is expected to fund the transaction through borrowings under its revolving credit facility.
KAI’s shares inched down 0.4% yesterday to eventually close the trading session at $284.23.
Based in Tualatin, OR, Key Knife is engaged in producing and supplying custom chipping, flaking and planing solutions to the wood products industry across the world. Its innovative knife systems allow wood processing mills to boost product quality, fiber recovery and output, and reduce operating expenses. Key Knife generated revenues of roughly $65 million in the trailing twelve months ended Sep 30, 2023.
Acquisition Rationale
The latest buyout is in sync with Kadant’s policy of acquiring businesses to strengthen its business and product portfolio. The inclusion of Key Knife’s solid aftermarket business, supported by its strong designing and manufacturing capabilities of knife systems, will enable KAI to expand its customer offerings and boost its position in wood processing industries. It will incorporate Key Knife into its Industrial Processing segment.
Management expects the transaction to be completed in early January 2024, conditioned on the fulfillment of certain customary closing conditions.
Zacks Rank & Price Performance
Kadant, with a $3.3 billion market capitalization, currently carries a Zacks Rank #2 (Buy). The company is likely to benefit from solid demand for both aftermarket parts and capital equipment, contribution from organic assets and focus on operational execution.
Image Source: Zacks Investment Research
The company’s shares have gained 26% compared with the industry’s growth of 16.2% in the past three months.
The Zacks Consensus Estimate for KAI’s current-year earnings has improved 5.2% over the last 60 days. It has a trailing four-quarter average earnings surprise of 17.3%.
3 Other Promising Stocks
We have highlighted three other top-ranked stocks from the same space, namely Applied Industrial Technologies (AIT - Free Report) , Crane Company (CR - Free Report) and Flowserve Corporation (FLS - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Applied Industrial delivered a trailing four-quarter average earnings surprise of 13.9%. In the past 60 days, the consensus estimate for AIT’s 2023 earnings has improved 1.8%. The stock has risen 12.7% in the past three months.
Crane delivered a trailing four-quarter average earnings surprise of 29.8%. In the past 60 days, the Zacks Consensus Estimate for CR’s 2023 earnings has remained stable. Shares of CR have rallied 36.3% in the past three months.
Flowserve has a trailing four-quarter average earnings surprise of 27.3%. The consensus estimate for FLS’ 2023 earnings has inched up 1% in the past 60 days. Shares of the company have increased 6.8% in the past three months.