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Curtiss-Wright (CW) Completes Acquisition of WSC for $34M
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Curtiss-Wright Corporation (CW - Free Report) recently announced that it has completed the acquisition of WSC, Inc. The transaction was valued at approximately $34 million.
Rationale Behind the Sale
Curtiss-Wright’s decision to acquire WSC’s business underscores its commitment to focus on its Naval & Power business. The buyout will help CW in achieving long-term profitable growth and strong free cash flow. In 2023, Naval & Power contributed a total of 40% to Curtiss Wright’s total sales.
With the acquisition, Curtiss-Wright will expand its portfolio of commercial nuclear technologies. WSC’s advanced technologies, like the proprietary 3KEYMASTER simulation platform, will enable Curtiss-Wright to modernize existing power plants and design new power plants, such as Advanced Small Modular Reactors.
The total commercial market, comprising Power & Process and General Industrial, contributed $940.8 million, representing 33% of CW’s end market in 2023. The end market benefits from higher revenues from commercial nuclear aftermarket, industrial automation products and surface treatment services and strong growth in the power and process market. For 2024, Curtiss-Wright expects the commercial power & process market to contribute 18% to its total sales.
Moving on to the naval defense segment, the market has been benefiting from higher revenue growth in Columbia-class submarine and CVN-81 aircraft carrier programs. In 2023, the naval defense market witnessed total sales of $720 million (approximately 25% of total sales). WSC’s simulation capabilities will further prove beneficial for the U.S. Navy. It will help enhance the design process of nuclear systems and components for aircraft carriers and submarines.
For 2024, Curtiss-Wright expects the naval defense market to contribute 25% to its total sales. Therefore, to reap the benefits of these demand trends, CW seems to have acquired WSC to focus more on its Naval & Power business.
Peer Moves
Defense companies often engage in acquisitions to improve their economies of scale, as consolidations tend to expand and strengthen their product portfolio. A few such companies have been discussed below.
AAR (AIR - Free Report) : On Mar 1, 2024, AAR Corp. completed the acquisition of Triumph Group’s Product Support business for $725 million. The buyout will enable the company to expand its repair capabilities and strengthen its footprint in the Asia-Pacific region.
The Zacks Consensus Estimate for AIR’s fiscal 2024 sales implies a 16.7% improvement over the previous year. The stock has delivered an average earnings surprise of 3.96% in the last four quarters.
BAE Systems (BAESY - Free Report) : On Feb 16, 2024, BAESY completed the acquisition of Ball Corporation’s unit, Ball Aerospace, for $5.5 billion. Through this acquisition, BAE Systems will be able to expand into highly attractive markets like military and civil space, C4ISR, and missiles and munitions.
BAESY boasts a long-term (three-to five-years) earnings growth rate of 12.9%. The Zacks Consensus Estimate for 2024 sales implies a 34.1% improvement over the previous year.
AeroVironment (AVAV - Free Report) : On Sep 18, 2023, AeroVironment completed the acquisition of Tomahawk Robotics for $120 million. The deal will enable it to integrate both companies’ technologies and thus accelerate the implementation of AI into unmanned systems.
The Zacks Consensus Estimate for AVAV’s fiscal 2024 sales implies a 30.9% improvement over the previous year. The stock has delivered an average earnings surprise of 72.18% in the last four quarters.
Price Performance
In the past year, shares of Curtiss-Wright have gained 47.4% compared with the industry’s 30.7% increase.
Image: Bigstock
Curtiss-Wright (CW) Completes Acquisition of WSC for $34M
Curtiss-Wright Corporation (CW - Free Report) recently announced that it has completed the acquisition of WSC, Inc. The transaction was valued at approximately $34 million.
Rationale Behind the Sale
Curtiss-Wright’s decision to acquire WSC’s business underscores its commitment to focus on its Naval & Power business. The buyout will help CW in achieving long-term profitable growth and strong free cash flow. In 2023, Naval & Power contributed a total of 40% to Curtiss Wright’s total sales.
With the acquisition, Curtiss-Wright will expand its portfolio of commercial nuclear technologies. WSC’s advanced technologies, like the proprietary 3KEYMASTER simulation platform, will enable Curtiss-Wright to modernize existing power plants and design new power plants, such as Advanced Small Modular Reactors.
The total commercial market, comprising Power & Process and General Industrial, contributed $940.8 million, representing 33% of CW’s end market in 2023. The end market benefits from higher revenues from commercial nuclear aftermarket, industrial automation products and surface treatment services and strong growth in the power and process market. For 2024, Curtiss-Wright expects the commercial power & process market to contribute 18% to its total sales.
Moving on to the naval defense segment, the market has been benefiting from higher revenue growth in Columbia-class submarine and CVN-81 aircraft carrier programs. In 2023, the naval defense market witnessed total sales of $720 million (approximately 25% of total sales). WSC’s simulation capabilities will further prove beneficial for the U.S. Navy. It will help enhance the design process of nuclear systems and components for aircraft carriers and submarines.
For 2024, Curtiss-Wright expects the naval defense market to contribute 25% to its total sales. Therefore, to reap the benefits of these demand trends, CW seems to have acquired WSC to focus more on its Naval & Power business.
Peer Moves
Defense companies often engage in acquisitions to improve their economies of scale, as consolidations tend to expand and strengthen their product portfolio. A few such companies have been discussed below.
AAR (AIR - Free Report) : On Mar 1, 2024, AAR Corp. completed the acquisition of Triumph Group’s Product Support business for $725 million. The buyout will enable the company to expand its repair capabilities and strengthen its footprint in the Asia-Pacific region.
The Zacks Consensus Estimate for AIR’s fiscal 2024 sales implies a 16.7% improvement over the previous year. The stock has delivered an average earnings surprise of 3.96% in the last four quarters.
BAE Systems (BAESY - Free Report) : On Feb 16, 2024, BAESY completed the acquisition of Ball Corporation’s unit, Ball Aerospace, for $5.5 billion. Through this acquisition, BAE Systems will be able to expand into highly attractive markets like military and civil space, C4ISR, and missiles and munitions.
BAESY boasts a long-term (three-to five-years) earnings growth rate of 12.9%. The Zacks Consensus Estimate for 2024 sales implies a 34.1% improvement over the previous year.
AeroVironment (AVAV - Free Report) : On Sep 18, 2023, AeroVironment completed the acquisition of Tomahawk Robotics for $120 million. The deal will enable it to integrate both companies’ technologies and thus accelerate the implementation of AI into unmanned systems.
The Zacks Consensus Estimate for AVAV’s fiscal 2024 sales implies a 30.9% improvement over the previous year. The stock has delivered an average earnings surprise of 72.18% in the last four quarters.
Price Performance
In the past year, shares of Curtiss-Wright have gained 47.4% compared with the industry’s 30.7% increase.
Image Source: Zacks Investment Research
Zacks Rank
Curtiss-Wright currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.