HD Supply's Presto Buyout To Boost MRO Distribution Business
Zacks Investment Research | Sep 05, 2019 07:22AM ET
HD Supply Holdings, Inc. (NASDAQ:HDS) , on Sep 3, announced that it successfully completed the acquisition of Presto Maintenance Supply. Financial terms of the transaction were not disclosed.
Notably, the company’s share price has increased roughly 0.7% in the past two days, closing the trading session at $39.19.
Presto is a Houston-based Maintenance, Repair and Operations (“MRO”) distribution company for customers in the multifamily industry. It primarily provides products related to plumbing, electrical, janitorial, pool, lighting and others. Popular product brands include Kwikset, Lysol, NuTone and Pentair. In 2018, Presto generated $15 million in revenues.
As noted, HD Supply will integrate Presto with its Facilities Maintenance segment. The segment engages in distributing MRO products, providing customer products and value-added services to customers in the healthcare, multifamily, institutional and hospitality industry.
In the first quarter of fiscal 2019 (ended May 5, 2019), Facilities Maintenance accounted for 51.7% of HD Supply’s revenues. On a year-over-year basis, the segment’s revenues represented growth of 6.8% from the year-ago quarter.
HD Supply believes that the Presto buyout will strengthen its abilities to serve customers more efficiently. Also, it will help the company expand business footprints in end-markets served by Presto.
For fiscal 2019 (ending January 2020), HD Supply anticipates that approximately 1-2% growth in “Living Space” MRO will boost the performance of the Facilities Maintenance segment. Net sales for the company are predicted to be $6,250-$6,350 million in the year.
Zacks Rank & Key Picks
With a market capitalization of nearly $6.7 billion, HD Supply currently carries a Zacks Rank #3 (Hold). The company stands to gain from the strengthening non-residential construction market, reduced financial flexibility and acquired assets. However, woes related to tariffs on China imports, unfavorable weather conditions and shortage of skilled labor might hurt its operations and thus its profitability.
In the past 60 days, the Zacks Consensus Estimate for HD Supply’s earnings has been lowered by 0.3% to $3.58 for fiscal 2019 and maintained at $3.34 for fiscal 2020 (ending January 2021).
HD Supply Holdings, Inc. Price and Consensus
Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.