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Regal Beloit (RBC) to Sell Drives & Control Business by 1Q19
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Regal Beloit Corporation (RBC - Free Report) announced that it agreed to sell its highly engineered drives and control systems business (Regal Drive Technologies) for an undisclosed amount. The other party to the transaction is an associate of Sun Capital Partners, Inc.
Regal Drive Technologies is primarily engaged in manufacturing starters, engineered controls and drives. The business, employing roughly 450 people, is anticipated to generate revenues of $131 million and earnings of 18 cents per share in 2018.
Details of the Divestment Deal
It’s worth mentioning here that Regal Drive Technologies is reported under Regal Beloit’s Commercial and Industrial Systems segment. This segment — accounted for roughly 49.9% of third-quarter 2018 revenues — primarily engages in manufacturing motors (medium and large), generators, custom drives, controls and systems. These products are used in industrial and commercial equipment; oil & gas systems; and commercial heating, ventilation and air conditioning (HVAC).
The divestment, once completed, will help Regal Beloit to concentrate on its core businesses by using the freed-up resources more effectively.
Subject to the receipt of customary regulatory approvals, Regal Beloit anticipates this divestment deal to close in the first quarter of 2019.
Snapshot of Regal Beloit’s Inorganic Initiatives
In addition to divestment, Regal Beloit engages in business acquisitions to gain access to new customers, regions and product lines.
In April 2018, the company acquired Nicotra Gebhardt S.p.A — specialist in making, selling and servicing blowers and fans. Its leading product brands are Gebhardt and Nicotra. This acquired business was integrated with Regal Beloit’s Commercial & Industrial Systems.
It’s worth mentioning here that acquisitions and net of divestitures added approximately 4.1% to the company’s sales growth in the third quarter of 2018.
Zacks Rank & Stocks to Consider
With a market capitalization of nearly $3.3 billion, Regal Beloit currently carries a Zacks Rank #3 (Hold). Strengthening segmental businesses, synergistic gains from acquired assets and improved productivity will be advantageous for the company in the quarters ahead. However, rising costs — mostly due to inflation in the prices of steel and aluminum — as well as the cyclical nature of the business and customer concentration risks might be dragging.
In the past 30 days, the company’s Zacks Consensus Estimate for earnings per share remained unchanged at $5.92 for 2018 and $6.53 for 2019. On a year-over-year basis, estimates for 2018 and 2019 represent growth of 21.6% and 10.4%, respectively.
In the past 60 days, earnings estimates for all these three stocks improved for the current year. Further, positive earnings surprise for the last quarter was 17.95% for DXP Enterprises, 23.64% for EnPro Industries and 0.86% for EnerSys.
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It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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Regal Beloit (RBC) to Sell Drives & Control Business by 1Q19
Regal Beloit Corporation (RBC - Free Report) announced that it agreed to sell its highly engineered drives and control systems business (Regal Drive Technologies) for an undisclosed amount. The other party to the transaction is an associate of Sun Capital Partners, Inc.
Regal Drive Technologies is primarily engaged in manufacturing starters, engineered controls and drives. The business, employing roughly 450 people, is anticipated to generate revenues of $131 million and earnings of 18 cents per share in 2018.
Details of the Divestment Deal
It’s worth mentioning here that Regal Drive Technologies is reported under Regal Beloit’s Commercial and Industrial Systems segment. This segment — accounted for roughly 49.9% of third-quarter 2018 revenues — primarily engages in manufacturing motors (medium and large), generators, custom drives, controls and systems. These products are used in industrial and commercial equipment; oil & gas systems; and commercial heating, ventilation and air conditioning (HVAC).
The divestment, once completed, will help Regal Beloit to concentrate on its core businesses by using the freed-up resources more effectively.
Subject to the receipt of customary regulatory approvals, Regal Beloit anticipates this divestment deal to close in the first quarter of 2019.
Snapshot of Regal Beloit’s Inorganic Initiatives
In addition to divestment, Regal Beloit engages in business acquisitions to gain access to new customers, regions and product lines.
In April 2018, the company acquired Nicotra Gebhardt S.p.A — specialist in making, selling and servicing blowers and fans. Its leading product brands are Gebhardt and Nicotra. This acquired business was integrated with Regal Beloit’s Commercial & Industrial Systems.
It’s worth mentioning here that acquisitions and net of divestitures added approximately 4.1% to the company’s sales growth in the third quarter of 2018.
Zacks Rank & Stocks to Consider
With a market capitalization of nearly $3.3 billion, Regal Beloit currently carries a Zacks Rank #3 (Hold). Strengthening segmental businesses, synergistic gains from acquired assets and improved productivity will be advantageous for the company in the quarters ahead. However, rising costs — mostly due to inflation in the prices of steel and aluminum — as well as the cyclical nature of the business and customer concentration risks might be dragging.
In the past 30 days, the company’s Zacks Consensus Estimate for earnings per share remained unchanged at $5.92 for 2018 and $6.53 for 2019. On a year-over-year basis, estimates for 2018 and 2019 represent growth of 21.6% and 10.4%, respectively.
Regal Beloit Corporation Price and Consensus
Regal Beloit Corporation Price and Consensus | Regal Beloit Corporation Quote
In the past month, Regal Beloit’s shares have decreased 3% compared with 4.8% decline recorded by the industry.
Some better-ranked stocks in the Zacks Industrial Products sector industry are DXP Enterprises, Inc. (DXPE - Free Report) , EnPro Industries, Inc. (NPO - Free Report) and EnerSys (ENS - Free Report) . While both DXP Enterprises and EnPro Industries currently sport a Zacks Rank #1 (Strong Buy), EnerSys carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for all these three stocks improved for the current year. Further, positive earnings surprise for the last quarter was 17.95% for DXP Enterprises, 23.64% for EnPro Industries and 0.86% for EnerSys.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>