EnPro Industries Inc. NPO, through its subsidiary STEMCO, recently acquired the Veyance North-American air spring business as well as Super Cushion and Spring Ride air springs from Continental Corporation’s ContiTech division. Financial terms of the deal were kept under wraps.
The Veyance North-American air spring business unit is the manufacturer of Goodyear air springs, particularly used in the suspension system of commercial vehicles. Also, the Super Cushion and Spring Ride businesses specialize in truck, trailer and truck cab suspension products, as well as cab seat springs.
The deal is in sync with EnPro Industries’ expansionary policy, serving to strengthen the company’s commercial vehicle suspension business. It will complement Stemco’s existing offerings, including high performance wheel-end, brake, suspension, and tire pressure management products for the commercial vehicle market. Also, a team of highly experienced employees from Continental will join EnPro Industries.
We believe that the acquisition, while reflective of EnPro Industries’ strong cash position, will also boost its growth opportunities. Last February, the company had acquired assets of ATDynamics, a privately held company specializing in aerodynamic products for the commercial trucking industry. This product line was also integrated with the company’s Stemco division.
The Zacks Consensus Estimate for EnPro Industries is pegged at $2.25 for 2015 and $2.62 for 2016. These estimates reflect year-over-year growth of 4.7% for 2015 and 16.4% for 2016. For second-quarter 2015, the consensus estimate stands at 77 cents per share, up 35.1% year over year.
In spite of the accretive acquisitions, certain headwinds have weakened EnPro Industries’ investment value in the near term. With a market capitalization of $1.3 billion, the company currently carries a Zacks Rank #5 (Strong Sell).
However, some of EnPro Industries’ prime competitors are performing well, having gained high Zacks Investment rankings. Better-ranked stocks in the machinery industry are IDEX Corporation IEX, The Middleby Corp. MIDD and Omnitek Engineering Corp. OMTK, each carrying a Zacks Rank #2 (Buy).
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