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Gibraltar Buys Nexus for $25M, Boosts Greenhouse Business


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Renowned construction company, Gibraltar Industries, Inc. (ROCK - Analyst Report) reinforced its position in the United States commercial greenhouse market, by acquiring Nexus Corporation (‘Nexus’) for $25 million in an all-cash deal.

CO-based Nexus has been offering non-imitable products and services within the greenhouse industry for nearly 25 years. By incorporating the Nexus team, Gibraltar Industries aims to make novel investments for developing advanced environmental control products and structures for the greenhouse market.

Acquisition Benefits

The current estimated value of the U.S. greenhouse market is roughly $250 million. The industry is anticipated to grow at a rate of 10% in 2017, on the back of rising demand for floriculture as well as locally grown organic food.

Gibraltar Industries expects to capture this booming market demand of the U.S. greenhouse market with the Nexus association. This deal would complement the company’s previously acquired RBI greenhouse company.

Gibraltar Industries’ newly established segment – Renewable Energy & Conservation – includes results generated from the RBI buyout. This segment’s sales significantly improved year over year in second-quarter 2016, benefiting from higher greenhouse market sales. Nexus is estimated to generate revenues worth $30 million during the fall of 2016 and further boost the segment’s performance in the quarters ahead.

Though the transaction would not create any material impact on Gibraltar Industries’ consolidated revenues and earnings result in 2016, it is likely to drive the company’s performance 2017 onward.

Zacks Rank and Share Price

Gibraltar Industries currently carries a Zacks Rank #2 (Buy). The stock valued $37.32 per share as on Oct 11, 2016.

The company has been fortifying its business, courtesy of better innovation, strategic acquisitions and improved operations. Based on the benefits from such initiatives, the company projects to generate full-year 2016 earnings within the range of $1.37–$1.47 per share, higher than the previously estimated range of $1.30–$1.40 per share.

Other Stocks to Consider

Some other favorably placed stocks within the industry are listed below:

Argan, Inc. (AGX - Snapshot Report) and NCI Building Systems Inc. (NCS - Analyst Report) , both of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last four trailing quarters, Argan generated an average earnings surprise of 13.26% and NCI Building Systems Inc. reported an average earnings surprise of 105.94%.

Masco Corporation (MAS - Analyst Report) currently holds a Zacks Rank #2. The company reported an average earnings surprise of 14.69% over the last four trailing quarters.

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