Nortek Inc. (NASDAQ:NTK) just announced it’s getting taken over, but investors are wagering another bidder might swoop in with a better offer. United Technologies should give the people what they want.
The industrial conglomerate led by CEO Greg Hayes was reportedly in talks to buy Nortek — a maker of ventilation fans and air-conditioning systems — back in August. Now, Nortek is selling itself for $2.8 billion including debt to Melrose Industries, the investment company known for buying down-on-their-luck targets and sprucing them up. No doubt Hayes noticed that Melrose soared almost 50 percent on the news. He’d do well to crash the party.
The idea of United Technologies doing some kind of acquisition has been a topic of conversation since Hayes took the top post in 2014. Initially, he was in the driver’s seat, ready to pull out the big guns for a growth-juicing deal and even approaching Honeywell CEO Dave Cote about a mega-merger. But repeated cuts to the company’s earnings guidance, the rollout of a costly new jet engine and a slowdown in China weakened Hayes’ hand and he soon found himself on the receiving end of Cote’s advances.
Nortek Equity Analysis
Nortek Inc. (NASDAQ:NTK) opened trading today as $86.50 and is trading in the range of 85.50-87.90 today. Nortek’s current market cap stands at $1.41 billion.
Compared to other peers in the General Building Materials sector, Nortek has outperformed in terms of quarterly revenue growth year over year at 0.07 vs. the industry average of 0.03. Nortek’s earnings per share is currently at -0.64, which is below than the sector average of 0.78.
Nortek is currently covered by 2 Wall Street analysts. The mean target price is $61.00 according to First Call. This presents a solid downside to the current price of the equity. The Mean Recommendation sits at 2.0 which is based on 1 Strong Buy and 1 Hold ratings.
The current quarter EPS consensus estimate is 1.02 with revenue estimates of 715.15M. Sales are expected to grow at a 1.60% rate. Nortek reported actual earnings last quarter of 0.16 which beats the -0.20 consensus estimate, a 180.00% surprise.
Nortek, Inc. (Nortek) is a diversified company delivering technology-driven products and solutions for lifestyle improvement at home and at work. The Company’s segments include the Air Quality and Home Solutions (AQH), which manufactures, markets and distributes room and whole house ventilation products; the Security and Control Solutions (SCS), which manufactures and distributes an array of products for residential applications; the Ergonomic and Productivity Solutions (ERG), which includes computer workstations with ergonomic features; the Residential and Commercial HVAC (RCH), which manufactures and sells split-system and packaged air conditioners; the Custom and Commercial Air Solutions (CAS), which designs, manufactures and sells custom heating, ventilation and air conditioning products and systems, and Audio, Video and Control Solutions (AVC), which manufactures and markets an array of products and solutions primarily for the residential audio, video automation and control.