Should You Follow Tontine Asset Management Out Of This Stock?

Patrick Industries, Inc. (NASDAQ:PATK) has been a great performer so far this year, up by 60% to a current trading price of $47.00. The company has a market cap of $726 million and does not pay a dividend. Second quarter revenues came in at $233 million, up by 24.2% year-over-year, while earnings have settled in at $0.78 per share. Analysts are rather conservative in their predictions for the current quarter, having issued an estimate of $228 million for revenues, while earnings are expected to be in the range of $0.50 to $0.55 per share.

On September 1, Patrick Industries announced the acquisition of North American Forest Products, Inc., a major manufacturer and distributor of lumber based products, in a transaction worth $85 million. Patrick Industries estimated the company’s trailing 12-month revenues to be $165 million, a figure that would take Patrick’s consolidated revenues for the same period to roughly $1 billion.

“The acquisition of North American marks one of the largest acquisitions in our history and represents a seamless fit with our other operating entities, manufacturing expertise, and customer relationships.  We are looking forward to working with the North American management team, who will continue to run the business, and look to maximize synergy opportunities between the two organizations through an effective transition plan, continuing the momentum we have in the marketplace,” said Todd Cleveland, Patrick Industries’ President and Chief Executive Officer.

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