Rexnord's Zurn Business to Benefit From World Dryer Buyout
Machinery company Rexnord CorporationRXN recently announced the acquisition of Illinois-based World Dryer Corporation. Financial terms of the buyout have not been disclosed.
As revealed, World Dryer is a leading manufacturer of electric hand dryers and related products for the commercial end markets. The firm operates as a unit of Carrier Commercial Refrigeration, Inc., which is the business unit in United Technologies Coporation's UTX UTC Climate, Controls & Security business. World Dryer was founded in 1950 and currently has annual revenue generation capability of $20 million.
Post completion of the buyout, World Dryer will be integrated with Rexnord's Water Management business segment. World Dryer's hand dryers will strongly complement the segment's Zurn business, which provides water-efficient plumbing products. The combined businesses will offer superior products to commercial building owners.
Acquiring meaningful businesses or disposing non-core assets have helped Rexnord improve its business portfolio and work toward profitability enhancement. Notably, the company acquired Cambridge International Holdings Corporation while divested its non-strategic RHF product line for the best interests of its shareholders in fiscal 2017. In first-quarter fiscal 2018, the company's acquisitions and divestments had a combined positive impact of 1% on sales growth.
Year to date, Rexnord's shares have yielded 30.5% return, outperforming 14.8% gain of the industry .
Zacks Rank & Stocks to Consider
With a market capitalization of nearly $2.7 billion, Rexnord currently carries a Zacks Rank #4 (Sell). Despite expansionary efforts, we believe that the company's exposure to industry rivalry, forex woes and uncertain economic conditions can jeopardize its future prospects.
Rexnord Corporation Price and Consensus
A couple of better-ranked stocks in the machinery space are Kennametal Inc. KMT and A.O. Smith Corporation AOS . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Kennametal's earnings for 2017 are predicted to grow 44.6% year over year while the same for 2018 are likely to rise 20.7%. Also, the company delivered an average positive earnings surprise of 4.02% in the last four quarters.
A.O. Smith's earnings estimates for 2017 and 2018 represent year-over-year growth of 14.2% and 12.4%, respectively. Also, it pulled off an average positive earnings surprise of 3.25% for the last four quarters.
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