Tech stock under pressure: ESCO Technologies Inc. (NYSE: ESE)

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ESCO Technologies Inc. (NYSE: ESE) stock fell over 1% ( as of  9:33 am GMT-5; Source: Google finance) after the company agreed to sell three units comprising its technical packaging business, includes Thermoform Engineered Quality LLC and Plastique, to subsidiaries of Sonoco Products Co. for approximately $187 million in cash. The company plans to use the proceeds to pay down debt and convert a defined benefit pension plan to an annuity. The companies expect the deal to close by the end of this year. TEQ had acquired the Fremont business in 2015 and Plastique in 2016. ESCO’s technical packaging division produced 11 percent of the company’s total sales in 2018, 12 percent in 2017 and 13 percent in 2016, according to the firm’s annual report. Aerospace sales (PTI, Crissair, and Mayday) grew by 19 percent in 2019 due to higher OEM build rates and strong after-market demand, partially offset by lower navy sales at VACCO due to revenue recognition timing on several large programs. USG sales from Doble rose 6 percent, while NRG’s sales to renewable energy customers fell nearly $10 million, due to a net decrease in USG sales. Technical Packaging sales fell nominally resulting from solid growth in domestic medical / pharm sales, which was offset by delayed new product introductions in Europe.

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On the other hand, the company for the fourth quarter has reported the Adjusted EPS of $1.09 per share. The company during the quarter has delivered the Adjusted EBITDA of $51 million compared to $52 million in Q4 2018. Further, the company had entered orders of $905 million in 2019 (book-to-bill of 1.11x) and of $279 million during the fourth quarter of 2019 (book-to-bill of 1.18x) which resulted in an ending backlog of $475 million at September 30, 2019, an increase of 24 percent, from September 30, 2018.

ESE has reported 5.4% increase in the net sales to $813 million in 2019 compared to $772 million in 2018. In FY 19, Filtration sales grew by 14 percent from 2018 (10.5 percent excluding Globe). Test sales grew by 3 percent in 2019 on the back of strong orders throughout 2019 and the completion of several large projects.

For the current quarter ending in January, Esco Technologies expects its per-share earnings to be in the range of 35 cents to 40 cents. The company expects full-year earnings to be in the range of $3.20 to $3.30 per share.

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