Valmont Industries, Inc. (VMI), MRC Global Inc (MRC): Three Trends Fueling This Manufacturer’s Growth

MRC Global Inc (NYSE:MRC) is facing difficult times. Due to weak demand from different regions such as Australia and Canada, current fiscal year revenue is expected to be in the range of $5.1 billion to $5.3 billion, a decline of 7% from last year. The company’s growth in recent years has been fueled by aggressive acquisitions. In line with this policy, it recently acquired Flow Control Products in order to increase its presence in the valve and valve-automation markets.

Lindsay Corporation (NYSE:LNN) and Valmont Industries, Inc. (NYSE:VMI) together control approximately 70%-75% of the mechanized irrigation market in the U.S . Like its peers, Lindsay has also expanded through acquisitions and recently it acquired privately held Claude Laval, also known as LAKOS Separators and Filtration Solutions . This acquisition should help Lindsay grow market share in the industrial and heat transfer markets.

Lindsay Corporation (NYSE:LNN) expects this acquisition to become accretive in the current fiscal year as management expects substantial synergy from the acquisition. LAKOS’ products are used in water supply projects where Lindsay is presently involved. So, the company expects to use its financial strength to grow its share in LAKOS’ markets.

However, Lindsay Corporation (NYSE:LNN)’s revenue stream is more irrigation centric whereas Valmont Industries, Inc. (NYSE:VMI)’s is distributed across five segments, and thus it is more diversified as compared to Lindsay.

Conclusion

Valmont has done well to grow its business by acquisitions. In addition, the company also pays a dividend, which yields 0.7%. This is not something great, but it has a payout ratio of just 11%, which suggests that there is a lot of room for dividend growth. All said, Valmont looks like a stable stock to own, and investors should consider adding it to their portfolio.

The article 3 Trends Fueling This Manufacturer’s Growth originally appeared on Fool.com and is written by ANUP SINGH.

ANUP SINGH has no position in any stocks mentioned. The Motley Fool owns shares of Lindsay.

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