Thermon Group Holdings, Inc. (THR) recently agreed to acquire certain assets of Unitemp cc for an undisclosed amount. The transaction, expected to complement the company’s existing line of businesses, has sent the share price up by 4.9% since Dec 22.
As revealed, the transaction will be carried out by Thermon Group’s subsidiary, which will also assume certain liabilities of Unitemp. The latter, based in Cape Town, South Africa, is a well-recognized supplier of heating, sensing, portable instruments, monitoring and control solutions.
The acquisition, expected to complete in spring 2015, will improve Thermon Group’s revenue generation capability by approximately $8 million. Also, the deal will suitably position the company to expand its product portfolio and penetrate deeper into the Sub-Saharan African market. Moreover, technological and managerial leadership of Unitemp will be an added advantage.
Thermon Group’s acquisition of Unitemp is in sync with its strategic business expansion policy. It is also indicative of the company’s strong balance sheet and healthy cash position. Exiting the second quarter of fiscal 2015 (ended Sep 30, 2014), the company had cash and cash equivalents of $82 million, while generating total funds of $18 million from its operating activities in the first-half.
The Zacks Consensus Estimate for Thermon Group is currently pegged at $1.29 for fiscal 2015 and $1.45 for fiscal 2016. These estimates represent year-over-year growth of 7.8% and 12.1% for fiscal 2015 and 2016, respectively. Also, over the next 5 years, earnings are projected to grow by 15%.
With a market capitalization of $755 million, Thermon Group Holdings presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the machinery industry include Blount International Inc. (BLT), Roper Industries Inc. (ROP) and Woodward, Inc. (WWD). While Blount International sports a Zacks Rank #1 (Strong Buy), both Roper Industries and Woodward hold a Zacks Rank #2 (Buy).
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