Kadant To Buy Syntron Material, Boost Commercial Footprint

Kadant Inc. (NYSE:KAI) has signed a definitive agreement to acquire Syntron Material Handling Group, LLC and some of its affiliates (“Syntron”), for roughly $179 million in cash.

Syntron is a renowned provider of systems and material handling equipment to different process industries, including packaging, food processing, mining, aggregates, and pulp and paper. The company manufactures state-of-the-art vibratory and conveying equipment under the Syntron and Link-Belt brands, at its facilities located in Changshu, China and Tupelo, MS. The company’s trailing 12-month revenues (ended Oct 31, 2018) came in at nearly $89 million and enjoys a stable earnings record past few years.

Kadant expects that the Syntron acquisition will aid in strengthening its commercial footprint across new process industries. The deal, currently subject to customary closing conditions, is predicted close in January 2019.

Kadant also noted that it has got into a limited consent under its existing credit agreement. Per this consent, the credit agreement lenders have agreed to limit certain funding conditions relating to the loans that Kadant might require, for funding a portion of the Syntron acquisition.

Our Take

Kadant currently carries a Zacks Rank #3 (Hold). The company is poised to grow on the back of solid end-market demand, acquisitions and potential innovation investments. However, material cost inflation (on account of tariffs), adverse foreign-exchange impact and unfavorable sales mix might dent Kadant’s near-term growth.

Over the past month, the company’s stock has lost 18.6%, wider than the 3.5% loss recorded by the industry it belongs to.

Stocks to Consider

Some better-ranked stocks in the same space are listed below:

DXP Enterprises, Inc. (NASDAQ:DXPE) sports a Zacks Rank #1 (Strong Buy). The company pulled off a positive average earnings surprise of 112.62% in the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Luxfer Holdings PLC (NYSE:LXFR) also carries a Zacks Rank of 1. The company delivered a positive average earnings surprise of 24.27% in the trailing four quarters.

Applied Industrial Technologies, Inc. (NYSE:AIT) also holds a Zacks Rank #2 (Buy). The company generated a positive average earnings surprise of 11.67% during the same time frame.

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