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Carlisle Companies Incorporated CSL recently completed the acquisition of the expanded polystyrene (EPS) insulation segment of PFB Holdco, Inc., a portfolio unit of The Riverside Company. The EPS insulation segment comprises primarily of the Plasti-Fab and Insulspan brands (jointly known as Plasti-Fab). The transaction was valued at $259.5 million in cash.
Based in Calgary, Alberta, Plasti-Fab offers EPS insulation products to the residential, commercial and infrastructure construction markets in Canada and the Midwestern United States. The firm operates three manufacturing facilities in the United States and eight across Canada.
CSL’s Acquisition Rationale
The acquisition is in sync with Carlisle’s Vision 2030 strategy and policy of acquiring businesses to strengthen its building envelope product portfolio. The buyout will enable CSL to incorporate Plasti-Fab’s vertically integrated polystyrene capabilities into its Insulfoam EPS business. This will enable Carlisle to expand its customer offerings and strengthen its position in the North American expanded polystyrene insulation market, which is worth about $1.5 billion.
Management expects to generate annual cost synergies of about $14 million within the first three years of the completion of the transaction. The acquisition is likely to be accretive by about 30 cents to the company’s adjusted earnings in 2025.
Zacks Rank & Price Performance
Carlisle, with a $17.4 billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is benefiting from inventory normalization and growing re-roof activity in the construction sector. Driven by strength across its businesses, it anticipates revenues to increase 10% in 2024. However, lower volumes from a slowdown in the residential construction market are adversely affecting CSL. High-debt levels are added concerns for the company.
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The company’s shares have gained 24.2% against the industry’s 8.2% decline in the past year.
The Zacks Consensus Estimate for CSL’s 2024 earnings has declined 1.5% to $20.25 per share over the last 60 days. It has a trailing four-quarter average earnings surprise of 15.7%.
Stocks to Consider
Some better-ranked companies are discussed below.
Federal Signal Corporation FSS presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FSS delivered a trailing four-quarter average earnings surprise of 11.8%. In the past 60 days, the Zacks Consensus Estimate for Federal Signal’s 2024 earnings has remained stable at $3.34 per share.
Powell Industries POWL presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 57.5%.
In the past 60 days, the consensus estimate for POWL’s fiscal 2025 earnings has increased 10.1% to $13.70 per share.
RBC Bearings Incorporated RBC presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 2.5%.
In the past 60 days, the consensus estimate for RBC’s fiscal 2025 earnings has increased 0.5% to $9.71 per share.