Quanex to Vend Nichols Aluminum - Analyst Blog


Shares of Quanex Building Products Corporation ( NX ), leading manufacturer of engineered materials and components for products in the fenestration industry, gained 5.7% after the company signed an agreement with Aleris to sell Nichols Aluminum, LLC for $110 million in cash on Feb 11. The transaction is expected to close following customary regulatory approvals.

Nichols, a subsidiary of Quanex Building, is a producer of aluminum sheet for the transportation, construction, machinery, consumer durables and electrical markets in North America. The sale includes two production plants in Davenport, Ia. and one plant each in Decatur, AL and Lincolnshire, IL.

Cleveland, Ohio-based Aleris currently has six rolled facilities: two in Ohio and one each in Kentucky, New Jersey, Virginia and West Virginia. Upon completion of the transaction, Nichols will become part of Aleris' Rolled Products North America business and will add more than 500 Nichols employees to Aleris.

It is expected that the housing markets will continue to recover with significant prospectsfor both organic and inorganic growth. The aforementioned deal will allow Quanex Building to focus on the Engineered Products segment and will help it to direct more energy and capital to its window and door components business.

Quanex Building reported earnings of 28 cents per share in the fourth quarter of fiscal 2013 (ended Oct 31, 2013). This marked a rise of almost six times from 5 cents earned in the year-ago quarter. Revenues also improved 17% year over year to $275 million.

Quanex Building forecasts window shipments in the U.S. to increase by 12% in 2014, with new construction rising 22% and R&R (replacement and remodeling) expanding 6%. For fiscal 2014, the company expects revenues in the Engineered Products Group (EPG) segment to rise 5%-6% from 2013.

However, due to uncertainty with regard to new warehouse rules and their possible impact on net spreads, the company expects 2014 revenue growth for the Nichols group (Aluminum Sheet Products Group) to be  in the mid to high single-digit range.

Houston, Texas-based Quanex Building is a leading manufacturer of engineered materials, components and systems that serves domestic and international window and door OEMs (original equipment manufacturers) through its Engineered Products and Aluminum Sheet Products Groups.

Quanex currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the sector include USG Corp. ( USG ), Chicago Bridge & Iron Company N.V. ( CBI ) and Orion Marine Group, Inc ( ORN ). All these have a Zacks Rank #2 (Buy).

CHICAGO BRIDGE (CBI): Free Stock Analysis Report

QUANEX BLDG PRD (NX): Free Stock Analysis Report

ORION MARINE GP (ORN): Free Stock Analysis Report

USG CORP (USG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CBI , NX , ORN , USG



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