Astec Acquires Ireland-Based Telestack - Analyst Blog

Astec Industries Inc. ASTE announced that it has completed the acquisition of Omagh, Northern Ireland-based Telestack Ltd. for $36 million. The acquisition is expected to be immediately accretive to earnings.

Telestack, which began operations in 1999, is engaged in the complete in-house design, manufacture, installation and commissioning of a complete line of material handling systems used primarily in the port, aggregate and mining industries.
 
The acquisition will help Astec grow in the infrastructure, mining and energy industries and also increase its global presence given that it sells equipment to six continents. The addition of Telestack will help boost Astec's product portfolio in all of the above-mentioned industries as well as material handling at ports across the globe.

Astec's fourth-quarter earnings improved 50% to 36 cents per share from 24 cents in the year-earlier quarter, ahead of the Zacks Consensus Estimate of 31 cents. The year-over-year growth was driven by successful operation of the new wood pellet plant in Georgia and strong performance of the aggregate processing equipment businesses.

Astec continues to invest significantly in increasing its capacity, manufacturing new products as well as upgrading its existing products. Introduction of products such as stabilizers, new models at Roadtec, larger crushers at Telsmith, pump trailers and vertical drilling rigs  will effectively contribute to sales growth. The revealing of 37 new products at ConExpo, the premier construction equipment trade show, will act as a catalyst.

The U.K. parliament has approved a tax credit for utilities to burn wood pellets as a source of fuel and switch from coal-fired plants to wood plants. This opens up a sizeable opportunity for Astec as the company is a supplier of all equipments used in wood pellet plants. Astec continues to receive new orders in addition to existing ones for wood pellet plants and these are expected to be significant contributors to its top line.

Astec currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include The Manitowoc Company, Inc. MTW, Komatsu Ltd. (KMTUY) and Caterpillar, Inc. CAT. While Manitowoc and Komatsu hold a Zacks Rank #1 (Strong Buy), Caterpillar holds a Zacks Rank #2 (Buy).