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Carlisle's Petersen Aluminum Buyout to Aid Roofing Business

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Carlisle Companies Incorporated (CSL - Free Report) announced that it has agreed to acquire Elk Grove Village, IL-based Petersen Aluminum Corporation. The transaction value has been fixed at approximately $197 million.

Founded in 1965, Petersen Aluminum is primarily engaged in manufacturing metal roofing products for use in the industrial, commercial, agricultural, residential and institutional end markets. The firm’s high-quality product offerings include wall and metal roofs panels, perimeter roof edge systems, flat sheets of steel and aluminium, coils and other products. Its most popular brand is PAC-CLAD.

Petersen Aluminum generates approximately $160 million in revenues annually.

Details of the Buyout

Per the terms of the agreement, the buyout will be executed through the company’s Carlisle Construction Materials (“CCM”) segment. It’s worth mentioning here that the acquisition will expand the segment’s product offerings in the metal roofing platform, helping generate annual synergies of approximately $4 million. Also, this takeover will enable the company to easily penetrate the markets of Arizona, Texas, the Midwest and Georgia.

Notably, Carlisle’s CCM segment primarily engages in manufacturing waterproofing and roofing products for use in the industrial and commercial end markets. The segment is also the leading manufacturer and supplier of rubber roofing systems in Europe. This segment accounted for roughly 65.8% of the company’s total revenues in third-quarter 2018.

Snapshot of Carlisle Companies’ Buyout Initiatives

We believe that the above-mentioned transaction is in line with Carlisle’s policy of acquiring businesses to gain an access to new customers, regions and product lines.

Prior to the Petersen Aluminum buyout-deal, Carlisle added a similar line of businesses to its portfolio by acquiring Drexel Metals, Sunlast Metal and Premium Panels. Drexel Metals was acquired last July while Sunlast Metal and Premium Panels were bought in June 2018.

Significantly, Carlisle spent approximately $19.5 million on acquisitions (net of cash acquired) during the first nine months of 2018. Further, acquired assets added nearly 11.7% to sales growth in the third quarter of 2018.

Zacks Rank

With a market capitalization of nearly $6 billion, Carlisle currently carries a Zacks Rank #3 (Hold). A diversified product portfolio, buyouts, healthy commercial construction market in the United States and restructuring initiatives will be advantageous for the company in the quarters ahead. However, increasing input costs and high freight expenses plus exposure to forex woes might hurt its performance.

In the past 60 days, Carlisle’s earnings estimates for 2018 have been revised downward by six brokerage firms while that for 2019 by four firms. Currently, the Zacks Consensus Estimate is pegged at $5.61 for 2018 and $6.92 for 2019, reflecting a decline of 5.4% and 1.3%, each for 2018 and 2019 from the respective tallies 60 days ago.

Carlisle Companies Incorporated Price and Consensus

Carlisle Companies Incorporated Price and Consensus | Carlisle Companies Incorporated Quote

Since the release of third-quarter 2018 results on Oct 8, 2018, the company’s shares have declined 14.1% compared with the industry’s fall of 18.5%.

Stocks to Consider

Some better-ranked stocks in the industry are HC2 Holdings, Inc. (HCHC - Free Report) , Crane Co. (CR - Free Report) and Federal Signal Corporation (FSS - Free Report) . While HC2 Holdings sports a Zacks Rank #1 (Strong Buy), Crane and Federal Signal carry 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 the above three stocks improved with respect to the current year. Further, the positive earnings surprise in the last reported quarter was delivered at 111.90% for HC2 Holdings, 11.72% for Crane and 9.09% for Federal Signal.

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