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Harman International Completed the Acquisition of TowerSec

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Mar. 14 2016, Published 12:19 p.m. ET

Price movement 

Harman International Industries (HAR) has a market cap of $5.8 billion. It rose by 6.1%. It closed at $81.41 per share as of March 11, 2016. The price movement on a weekly, monthly, and YTD (year-to-date) basis is 0.77%, 17.4%, and -13.2%, respectively.

Currently, Harman International is trading 6.9% above its 20-day moving average, 3.9% above its 50-day moving average, and 17.6% below its 200-day moving average.

The iShares Morningstar Mid-Cap Growth Index Fund (JKH) invests 0.50% of its holdings in Harman International. JKH tracks a market-cap-weighted index of mid-cap companies selected by Morningstar based on their growth characteristics. JKH’s YTD price movement was -6.4% as of March 10, 2016.

The Vanguard Mid-Cap Growth ETF (VOT) invests 0.47% of its holdings in Harman International. VOT tracks a market-cap-weighted index of mid-cap growth companies selected by the Center for Research in Security Prices.

The market caps of Harman International’s competitors are as follows:

  • Apple (AAPL) – $567.0 billion
  • Sony Corp.-ADR (SNE) – $30.9 billion
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Harman International acquired TowerSec

Harman International Industries completed the acquisition of TowerSec—a provider of automotive cyber security. It expects that the transaction will be dilutive to operational earnings by ~$0.05 in fiscal 2016, excluding transaction costs and purchase accounting adjustments. The TowerSec acquisition will be reported as part of the Harman Connected Car Division.

Performance in recent fiscal 2Q16

Harman International Industries reported fiscal 2Q16 net sales of $1,772.2 million—a rise of 11.9% compared to net sales of $1,583.5 million in fiscal 2Q15. The sales of connected car and lifestyle audio rose by 2.1% and 20.4%, respectively. The sales of professional solutions fell by 6.7% in fiscal 2Q16. The company’s cost of sales as a percentage of net sales and gross profit rose by 1.5% and 10.5%, respectively, in fiscal 2Q16—compared to fiscal 2Q15. Its non-GAAP (generally accepted accounting principles) net income and non-GAAP earnings per share rose to $134.2 million and $1.84, respectively, in fiscal 2Q16—compared to $126.0 million and $1.79, respectively, in fiscal 2Q15.

Meanwhile, its cash and cash equivalents fell by 32.6% and its inventories rose by 26.2% in fiscal 2Q16—compared to fiscal 4Q15. Its current ratio rose to 1.43 and its DE (debt-to-equity) ratio fell to 1.36 in fiscal 2Q16—compared to a current ratio and a DE ratio of 1.36 and 1.45 in fiscal 4Q15.

The company declared a quarterly cash dividend of $0.35 per share on its common stock. The dividend will be paid on February 23, 2016, to each shareholder of record at the close of business on February 8, 2016.

Harman International’s price-to-earnings and price-to-book value ratios are 17.1x and 2.4x, respectively, as of March 11, 2016.

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