Raven to Buy Vista Research - Analyst Blog
January 04 2012 - 11:40AM
Zacks
The Aerostar division of Raven Industries
Inc. (RAVN) inked a deal to acquire Vista Research Inc. for
an initial cash consideration of $12 million, with payments of up
to $38.5 million in added benchmark and earn-out over the coming
seven years. The acquisition is expected to close in January
pending closing conditions.
Raven expects the acquisition to be accretive to its earnings
and generate solid return on investments plus cash flows.
Vista Research is a leading provider of surveillance systems.
Its smart sensing radar systems are used in advanced detection and
tracking applications. As such, this acquisition will augment Raven
Aerostar’s aerostat security solutions.
Aerostar will henceforth be able to supply more
competitive aerostat systems with the help of Vista's radar
processing technology and be able to access a wider customer
base.
Vista Raven also expects to combine Vista's technology with its
Marine navigation to offer improved port security. Also, going
forward, this acquisition will help Raven to cater to the growing
demand for low priced detection and tracking systems used by
government and law enforcement agencies.
Raven expects to develop products for identifying and tracking
small objects over land, on water and in air. The company also
believes that its innovations will augment or might substitute the
traditional, high-cost radar systems presently in use.
The Aerostar division reported a dip in sales for the
fiscal third quarter. We believe this acquisition will help the
division to turnaround in due course.
The Zacks
Consensus Estimate for fiscal fourth quarter 2012 is 48 cents per
share. For fiscal years 2012 and 2013, the Zacks Consensus Estimates are,
respectively, $2.65 and $2.93 per share.
The company continues to make significant investments to build
international sales and boost its overall revenues. Further,
Raven’s debt-free balance sheet and solid cash flow provide the
scope to fund future growth and hike dividends.
We retain our Outperform recommendation on Raven Industries. The
quantitative Zacks #2 Rank (short-term Buy rating) for the company
indicates upward pressure on the shares over the near term.
South Dakota-based Raven Industries Inc. is an industrial
manufacturer providing a variety of products for the agricultural,
industrial, construction and military/aerospace markets.
Graco Inc. (GGG)
and Spartech Corp. (SEH) are the two close competitors of
Raven.
GRACO INC (GGG): Free Stock Analysis Report
RAVEN INDS INC (RAVN): Free Stock Analysis Report
SPARTECH CORP (SEH): Free Stock Analysis Report
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