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Carlisle (CSL) Gains From Solid Growth Drivers Amid Cost Woes
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On Aug 14, we issued an updated research report on Carlisle Companies Incorporated (CSL - Free Report) . Over the past year, shares of the company have secured double-digit growth, outperforming the gain registered by the industry.
Let’s dig into the fundamental aspects influencing the performance of the stock.
Existing Growth Drivers
Carlisle has a diversified business structure, comprising a solid portfolio of niche brands and businesses, with highly engineered and high-margin products. This enables it to tap opportunities and neutralize operating risks associated with a single market.
The company engages in the design, manufacture and sale of a wide range of roofing and waterproofing products, engineered products, finishing equipment and brake, as well as friction-system solutions.
Carlisle has pulled off a positive average earnings surprise of 12.85% for the last four quarters, including the earnings beat of 18.67% recorded in the second quarter of 2018. Notably, the company’s earnings per share are predicted to grow 15% in the next three to five years.
The company’s ongoing price-realization efforts, strength in commercial construction business, and sturdier SatCom and Aerospace markets’ demand will likely bolster Carlisle’s revenues, moving ahead. Additionally, we notice that Carlisle deployed around $1 billion in 2017 for four acquisitions — namely San Jamar, Arbo, Drexel Metals and Accella Performance Materials. These acquisitions will continue to drive its top line, in the near future.
Based on these positives, the company anticipates its overall revenue growth to be about 20% in 2018.
Stellar revenues, increased productivity and cost savings from the existing Carlisle Operating System (COS) will likely boost Carlisle’s profitability, going forward.
In addition to the above, Carlisle’s Vision 2025 program (launched in 2017) will likely help strengthen its top- and bottom-line growth trajectory in the upcoming quarters. Under the program, the company seeks to achieve above-market organic growth, pursue synergistic acquisitions, further leverage its COS and continue to provide higher returns to shareholders.
Carlisle’s strong liquidity position enhances its strength. The company also remains highly committed toward increasing wealth of its shareholders through share-repurchase programs. In this regard, during first-quarter 2018, Carlislerepurchased approximately $111 million of its shares.
Over the past year, Carlisle’s shares have rallied 29.1% compared with 10.8% growth recorded by the industry.
Existing Risks
Carlisle’s cost of revenues has been rising, of late, due to material cost inflation and elevated freight costs. The company’s cost of sales flared up 16.8% in 2017 and 13.4% in first-half 2018. Escalating costs, if unchecked, might dent Carlisle’s profits in the near term.
Also, the company’s domestic and foreign operations are subject to significant competitive pressure. Federal Signal Corporation (FSS - Free Report) , Crane Co. (CR - Free Report) and Macquarie Infrastructure Corporation are some important players in the industry. In order to hedge the industry rivalry, the company needs to come up with innovative products that might result in escalated costs in the near term.
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Carlisle (CSL) Gains From Solid Growth Drivers Amid Cost Woes
On Aug 14, we issued an updated research report on Carlisle Companies Incorporated (CSL - Free Report) . Over the past year, shares of the company have secured double-digit growth, outperforming the gain registered by the industry.
Let’s dig into the fundamental aspects influencing the performance of the stock.
Existing Growth Drivers
Carlisle has a diversified business structure, comprising a solid portfolio of niche brands and businesses, with highly engineered and high-margin products. This enables it to tap opportunities and neutralize operating risks associated with a single market.
The company engages in the design, manufacture and sale of a wide range of roofing and waterproofing products, engineered products, finishing equipment and brake, as well as friction-system solutions.
Carlisle has pulled off a positive average earnings surprise of 12.85% for the last four quarters, including the earnings beat of 18.67% recorded in the second quarter of 2018. Notably, the company’s earnings per share are predicted to grow 15% in the next three to five years.
The company’s ongoing price-realization efforts, strength in commercial construction business, and sturdier SatCom and Aerospace markets’ demand will likely bolster Carlisle’s revenues, moving ahead. Additionally, we notice that Carlisle deployed around $1 billion in 2017 for four acquisitions — namely San Jamar, Arbo, Drexel Metals and Accella Performance Materials. These acquisitions will continue to drive its top line, in the near future.
Based on these positives, the company anticipates its overall revenue growth to be about 20% in 2018.
Stellar revenues, increased productivity and cost savings from the existing Carlisle Operating System (COS) will likely boost Carlisle’s profitability, going forward.
In addition to the above, Carlisle’s Vision 2025 program (launched in 2017) will likely help strengthen its top- and bottom-line growth trajectory in the upcoming quarters. Under the program, the company seeks to achieve above-market organic growth, pursue synergistic acquisitions, further leverage its COS and continue to provide higher returns to shareholders.
Carlisle’s strong liquidity position enhances its strength. The company also remains highly committed toward increasing wealth of its shareholders through share-repurchase programs. In this regard, during first-quarter 2018, Carlislerepurchased approximately $111 million of its shares.
Over the past year, Carlisle’s shares have rallied 29.1% compared with 10.8% growth recorded by the industry.
Existing Risks
Carlisle’s cost of revenues has been rising, of late, due to material cost inflation and elevated freight costs. The company’s cost of sales flared up 16.8% in 2017 and 13.4% in first-half 2018. Escalating costs, if unchecked, might dent Carlisle’s profits in the near term.
Also, the company’s domestic and foreign operations are subject to significant competitive pressure. Federal Signal Corporation (FSS - Free Report) , Crane Co. (CR - Free Report) and Macquarie Infrastructure Corporation are some important players in the industry. In order to hedge the industry rivalry, the company needs to come up with innovative products that might result in escalated costs in the near term.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>