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Gibraltar Buys Delta Separations for $50M to Boost Offerings

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Gibraltar Industries, Inc. (ROCK - Free Report) has acquired California-based Delta Separations — a privately-held engineering and manufacturing company — for $50 million in cash.

Delta Separations is engaged in centrifugal ethanol-based extraction systems. It sells directly to cannabis, hemp, and biomass processors that are focused on the production of botanical oil extracts for a variety of consumer products. The acquired company generated $46 million revenues in 2019.

Gibraltar believes that the acquisition will expand offerings and enhance customer satisfaction. The acquisition is expected to be accretive in 2020.

Gibraltar’s Acquisition Strategy Bodes Well

Gibraltar has been benefiting from strategic initiatives that primarily focus on operational excellence, innovation, portfolio management and acquisitions. Acquisitions, which are a key part of Gibraltar’s transformation plan, contributed 2.5% to net sales growth of 6.8% year over year.

On Jan 19, 2020, the company announced the acquisition of Canada-based Thermo Energy Systems, which will enable it to penetrate into the biologically-grown organic food market. Again on Aug 30, 2019, it acquired Apeks Supercritical, which holds a leading position in extraction processing with a strong leadership team, patented technology and leading-edge clean extraction technology in the United States. The acquisitions strengthened Gibraltar’s position in the U. S. solar renewable energy market.

Our Take

Shares of Gibraltar have gained 9.8% in the year-to-date period compared with its industry’s 1.4% rally. This Zacks Rank #2 (Buy) company’s 2020 earnings have moved north over the past 30 days, reflecting analysts’ optimism over the company’s prospects.

The uptick was mainly backed by a solid four-pillar value creation strategy, and strong Renewable Energy & Conservation and Industrial and Infrastructure Product segments. Notably, it sees long-term market prospects of both Renewable Energy and Conservation businesses.

Per a study, solar energy has become a cost-effective option for most part of the United States. Meanwhile, on the Conservation front, the company remains optimistic about the legal cannabis market, which is expected to grow to $57 billion worldwide over the next 10 years (per a report by Arcview Market Research). The company expects demand to remain strong in the future.

Other Key Picks

Other top-ranked stocks in the same space include Armstrong World Industries, Inc. AWI, CRH plc CRH and Installed Building Products, Inc. IBP, each holding a Zack Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Armstrong World and Installed Building Products have three-five year expected EPS growth rate of 12.1% and 16%, respectively.

CRH’s 2020 earnings are expected to rise 15.3%.

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