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Here's Why Hold Strategy is Beneficial for Carlisle (CSL)

Carlisle Companies Incorporated CSL is poised to gain from its diversified business structure. The company’s global footprint, focus on product launches and ability to penetrate different markets through acquisitions are commendable.

Solid momentum in the U.S. reroofing end-market and new construction activity are expected to aid the company’s Carlisle Construction Materials (CCM) segment.

Growing demand for energy-efficient building products and a strong backlog level also bode well for the segment. The Carlisle Weatherproofing Technologies (CWT) segment will likely be driven by the Henry acquisition and solid non-residential demand.

Robust demand in the medical technologies and commercial aerospace business will drive growth for CSL’s Carlisle Interconnect Technologies (CIT) segment. The Carlisle Fluid Technologies (CFT) segment will benefit from its focus on product introductions, price discipline and growing backlog level. Solid demand in its end markets is expected to negate the impact of the persistent raw material cost inflation and supply-chain constraints that the company has been witnessing.  

Carlisle’s acquisition of MBTechnology in February 2022, strengthened its product-building platform, and boosted its energy-efficient solution offerings. Also, the Henry Company acquisition in September 2021 enhanced CSL’s product offerings for construction activities. It is worth noting that acquisitions boosted revenues by 9.2% in third-quarter 2022.

Under the Vision 2025 program, Carlisle looks forward to achieving above-market organic growth, acquiring new assets and leveraging its Carlisle Operating System (COS) to drive efficiencies through business processes apart from returning cash to its shareholders. In third-quarter 2022, price realization, higher volumes and contribution from the COS increased the company’s operating margin by 820 basis points.

CSL’s efforts to reward its shareholders through dividend payments and share buybacks are encouraging. During the first nine months of 2022, Carlisle paid out dividends worth $95.6 million and repurchased shares for $201.1 million. The company’s board of directors also announced a 39% hike in its quarterly dividend rate in August 2022.

In light of the above-mentioned positives, we believe that investors should retain to the Carlisle stock for now, as suggested by its current Zacks Rank #3 (Hold).

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In the past six months, the stock has declined 0.6% compared with the industry’s decline of 1.4%.

Key Picks

Some better-ranked companies are discussed below:

Applied Industrial Technologies, Inc. AIT presently has a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

AIT’s earnings estimates have increased 4.6% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 20% in the past six months.

IDEX Corporation IEX presently has a Zacks Rank #2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.

In the past 60 days, IDEX’s earnings estimates have increased 1.8% for 2022. The stock has rallied 20.3% in the past six months.

EnerSys ENS delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank of 2.

ENS’ earnings estimates have increased 0.6% for fiscal 2023 (ending March 2023) in the past 60 days. The stock has gained 7.9% in the past six months.

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