I have followed Carlisle Companies (CSL) for more than a decade and was attracted to the story in 2008 when Dave Roberts, then CEO of Graco (GGG), joined as CEO, with the promise of making it a better company. While the Great Recession initially impeded the operational improvements he intended, Robertson has done a terrific job of transforming the company and creating significant shareholder value, with the company producing record EPS in 2011 and all-time high stock price in early 2012, well ahead of the market and the industrial sector.
As part of his portfolio repositioning strategy, Roberts announced on the Q2 conference call the potential disposition of one of its operating segments, Carlisle Transportation Products, which was actually the origin of the company. CTP produces tires, wheels and industrial belts for several industries, including agriculture, outdoor power, power sports and ATVs. The company announced the disposition on 10/21 for $375mm, with the close expected in early 2014. With the Q3 earnings report and the call that followed, it is apparent that the capital won't be deployed until most likely mid-2014. Given the loss of earnings as well as lingering challenges in one of CSL's 3 core businesses, analysts are likely to lower their estimates for 2014. I would look to build a position in CSL on any sort of pullback in the coming weeks and believe that the stock could trade to 83 over the next year based on achieving 16PE on 2015 estimated earnings, with the potential in a more bullish capital redeployment to trade to 99 based on 18PE.
CSL: A Diversified Industrial Company
Based in North Carolina, CSL has been operating five segments,