Industrial electrical equipment maker
Regal Beloit Corporation
) recently closed the acquisition of Cemp s.r.l., an Italy-based
manufacturer of hazardous duty motors primarily for oil and gas
and marine applications, for an undisclosed amount. The deal,
signed last month, is part of Regal Beloit's long-term strategy
to augment its existing geographic footprint and boost profitably
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The acquisition is expected to be accretive to Regal Beloit's
earnings per share in 2014 and 2015 to the tune of 3 cents - 5
cents and 6 cents - 8 cents, respectively. However, for fourth
quarter 2013, the transaction is expected to be dilutive to
earnings per share by 1 cent - 2 cents due to purchase accounting
adjustments and transaction costs.
During the third quarter earnings call, Regal Beloit had provided
GAAP earnings guidance in the range of 77 cents to 85 cents per
share and adjusted earnings within 82 cents to 90 cents per
share. The guidance was based on a continued listless demand in
the North American commercial and industrial markets with decent
improvements in China. Regal Beloit also expected unfavorable
market dynamics in the HVAC (heating, ventilation, and air
conditioning) sub-segment with seasonality in results.
The current Zacks Consensus Estimate for the fourth quarter is
pegged at 84 cents. Earnings estimates are moving up for Regal
Beloit as 8 out of 10 estimates have moved up in the last 30
days, while only 1 has gone down. We remain bullish on the
transaction and expect the acquisition to be accretive to
earnings in the long run.
Headquartered in Beloit, Wis., Regal Beloit is a leading
manufacturer of electrical and mechanical motion control
products. Major products include electric motors, HVAC electric
motors, electric generators and controls, and mechanical motion
control products. The products are offered to diversified end
markets such as commercial construction and building, industrial
machinery, industrial equipment, process industries, industrial
transportation, and consumer related segments. The company has
manufacturing, sales, and service facilities throughout the U.S.,
Canada, Mexico, Europe, and Asia.
Regal Beloit currently has a Zacks Rank #3 (Hold). Other players
in the industry worth mentioning include
AO Smith Corp.
), both carrying a Zacks Rank #1 (Strong Buy), and
) that retains a Zacks Rank #2 (Buy).