Valmont Industries, Inc. (VMI - Free Report) entered into an agreement to purchase the assets of CSP Coatings Systems of Auckland, New Zealand. The deal will be funded with cash on hand and is expected to complete in the fourth quarter of fiscal 2018.
CSP is the most comprehensive steel coating service provider in New Zealand. It provides a full range of coatings services, which include zinc metal spraying, hot dip galvanizing, painting, and duplex anti-corrosion coatings. Additionally, CSP serves a broad base of customers and end markets.
The acquisition is in sync with Valmont’s strategy of geographic expansion and also builds on its presence in the New Zealand market. CSP facilities provide a platform to leverage the company’s galvanizing operation on the North Island, while expanding its footprint to the South Island. The buyout also allows the company to grow on an extensive portfolio of coatings services. The company expects to achieve EPS accretion of 6 cents in the first year following the deal closure after taking into account transaction costs.
In a year’s time, Valmont have underperformed the industry it belongs to. The stock has declined around 13.9% against the industry’s growth of 12.2%.
Valmont is optimistic about its markets and businesses for the rest of 2018. As a result of pricing actions and improved demand in the lighting and traffic business, Valmont anticipates favorable revenues and profit comparisons in the Engineered Support Structures segment.
However, results in the Irrigation segment are expected to deteriorate from last year due to challenging end-market conditions. Owing to strong industrial demand, the Coatings segment results are expected to be in line with first-half results.
Valmont Industries, Inc. Price and Consensus
Zacks Rank & Stocks to Consider
Valmont is a Zacks Rank #3 (Hold) stock.
Some better-ranked companies in the basic materials space are ArcelorMittal (MT - Free Report) , CF Industries Holdings, Inc. (CF - Free Report) and Air Products and Chemicals, Inc. (APD - Free Report) .
ArcelorMittal has an expected long-term earnings growth rate of 4.8% and a Zacks Rank #1 (Strong Buy). The company’s shares have gained 25% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has an expected long-term earnings growth rate of 6% and a Zacks Rank #2 (Buy). The company’s shares have rallied 57.6% in the past year.
Air Products has an expected long-term earnings growth rate of 16.2% and a Zacks Rank #2. Its shares have risen 10.9% in a year’s time.
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