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Kadant Inc. (KAI - Free Report) recently announced that it has closed the acquisition of Key Knife, Inc. and its affiliates. This move is in sync with the company’s policy of acquiring businesses to boost its product line and gain access to new customers and regions.
On Dec 28, 2023, the companies entered the acquisition deal for a cash consideration of about $156 million, subject to closing conditions. Kadant funded the transaction through borrowings under its revolving credit facility.
KAI’s shares declined 2.1% yesterday to eventually close the trading session at $274.41.
Inside the Headlines
Key Knife produces custom chipping, flaking and planing solutions for the global wood products industry. The Tualatin, OR-based company generated revenues of approximately $65 million in the trailing twelve-month period ended Sep 30, 2023.
The addition of Key Knife’s strong aftermarket business, along with its solid product portfolio, will enable KAI to boost its customer offerings and strengthen its position in wood processing industries.
Kadant will integrate Key Knife into its Industrial Processing segment, which consists of the wood processing and stock-preparation product lines. It is worth noting that the Industrial Processing segment’s revenues increased 9.4% year over year to $94.2 million in the third quarter of 2023.
Zacks Rank & Price Performance
Kadant, with a $3.2 billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company has been gaining from solid demand for both aftermarket parts and capital equipment, contributions from organic assets and a focus on operational execution. However, rising operating costs and expenses remain a concern for its profitability.
Image Source: Zacks Investment Research
In the past three months, the company’s shares have gained 22.1% compared with the industry’s growth of 16.6%.
The Zacks Consensus Estimate for KAI’s 2023 earnings has improved 2.5% over the last 60 days. It has a trailing four-quarter average earnings surprise of 17.3%.
Key Picks
We have highlighted three better-ranked stocks from the same space, namely Graham Corporation (GHM - Free Report) , Parker-Hannifin Corporation (PH - Free Report) and Flowserve Corporation (FLS - Free Report) . While Graham sports a Zacks Rank #1 (Strong Buy), Parker-Hannifin and Flowserve each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Graham delivered a trailing four-quarter average earnings surprise of 264.8%. In the past 60 days, the consensus estimate for GHM’s fiscal 2024 earnings has improved 106.7%. The stock has risen 20.7% in the past three months.
Parker-Hannifin delivered a trailing four-quarter average earnings surprise of 11.8%. In the past 60 days, the Zacks Consensus Estimate for PH’s fiscal 2024 earnings has increased 1.9%. Shares of PH have rallied 20.1% 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 6.1% in the past three months.
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Kadant (KAI) Closes Key Knife Buyout, Boosts Product Portfolio
Kadant Inc. (KAI - Free Report) recently announced that it has closed the acquisition of Key Knife, Inc. and its affiliates. This move is in sync with the company’s policy of acquiring businesses to boost its product line and gain access to new customers and regions.
On Dec 28, 2023, the companies entered the acquisition deal for a cash consideration of about $156 million, subject to closing conditions. Kadant funded the transaction through borrowings under its revolving credit facility.
KAI’s shares declined 2.1% yesterday to eventually close the trading session at $274.41.
Inside the Headlines
Key Knife produces custom chipping, flaking and planing solutions for the global wood products industry. The Tualatin, OR-based company generated revenues of approximately $65 million in the trailing twelve-month period ended Sep 30, 2023.
The addition of Key Knife’s strong aftermarket business, along with its solid product portfolio, will enable KAI to boost its customer offerings and strengthen its position in wood processing industries.
Kadant will integrate Key Knife into its Industrial Processing segment, which consists of the wood processing and stock-preparation product lines. It is worth noting that the Industrial Processing segment’s revenues increased 9.4% year over year to $94.2 million in the third quarter of 2023.
Zacks Rank & Price Performance
Kadant, with a $3.2 billion market capitalization, currently carries a Zacks Rank #3 (Hold).
The company has been gaining from solid demand for both aftermarket parts and capital equipment, contributions from organic assets and a focus on operational execution. However, rising operating costs and expenses remain a concern for its profitability.
Image Source: Zacks Investment Research
In the past three months, the company’s shares have gained 22.1% compared with the industry’s growth of 16.6%.
The Zacks Consensus Estimate for KAI’s 2023 earnings has improved 2.5% over the last 60 days. It has a trailing four-quarter average earnings surprise of 17.3%.
Key Picks
We have highlighted three better-ranked stocks from the same space, namely Graham Corporation (GHM - Free Report) , Parker-Hannifin Corporation (PH - Free Report) and Flowserve Corporation (FLS - Free Report) . While Graham sports a Zacks Rank #1 (Strong Buy), Parker-Hannifin and Flowserve each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Graham delivered a trailing four-quarter average earnings surprise of 264.8%. In the past 60 days, the consensus estimate for GHM’s fiscal 2024 earnings has improved 106.7%. The stock has risen 20.7% in the past three months.
Parker-Hannifin delivered a trailing four-quarter average earnings surprise of 11.8%. In the past 60 days, the Zacks Consensus Estimate for PH’s fiscal 2024 earnings has increased 1.9%. Shares of PH have rallied 20.1% 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 6.1% in the past three months.