Back to top

Image: Bigstock

Emerson Adds Open Systems & Progea to Automation Solutions

Read MoreHide Full Article

Emerson Electric Co. (EMR - Free Report) announced, on Oct 1, 2020, that it completed acquiring Minneapolis, MN-based Open Systems International, Inc. for $1.6 billion in cash. Concurrently, the company stated that it acquired Modena, Italy-based Progea Group.

It is worth noting here that Emerson Electric’s share price increased 1.4% on Oct 2, while decreased 1.6% on Oct 1. The closing price on Oct 2 was $65.54.

Inside the Headlines

Open Systems is well-recognized for its enterprise automation solutions globally. Its main customer base is in the utilities sector. The high-performance, open and state-of-the-art solutions include Substation Automation Systems, Distribution Management Systems, Energy Management Systems and others. As many as 1,000 people are working globally for Open Systems.

The solutions provided by Open Systems as well as its expertise in transmission and distribution industries in the power sector will add more value to Emerson Electric’s software offerings in the power generation industry. In all, the buyout will assist Emerson Electric’s customers (in the utilities and other industries) to digitize operations and thus help in the use of renewable energy sources and enhancing energy efficiency.

Progea is specialized in providing technologies related to human-machine interface, industrial internet of things, supervisory control and data acquisition, and plant analytics. The buyout will enhance Emerson’s offerings within control and embedded software space. These products will be primarily useful in building automation, manufacturing and infrastructure applications.

It is worth noting here that Open Systems and Progea will be part of Emerson Electric’s Automation Solutions segment. The division engages in providing valves, measurement and analytical instrumentation, actuators and regulators, process control systems and solutions, and industrial solutions. The segment’s revenues in third-quarter fiscal 2020 (ended Jun 30, 2020) were $2,589 million, representing 66.1% of total revenues generated by Emerson.

Emerson Electric’s Buyout Activities

The company believes in acquiring businesses to improve its product lines and market exposure. In the first nine months of fiscal 2020 (ended June 2020), it used $114 million for making acquisitions.

In March 2020, Emerson acquired Verdant, a leading provider of energy management solutions. Also, it added American Governor Company to its portfolio in April 2020. While Verdant has been strengthening Emerson’s thermostat and sustainability solutions portfolio, American Governor Company has been boosting offerings for power customers.

Zacks Rank, Estimate Trend and Price Performance

With a market capitalization of $39.2 billion, Emerson Electric currently carries a Zacks Rank #3 (Hold). The company is likely to benefit from businesses in power, medical, food and beverage, and life science markets as well as from buyouts and shareholder-friendly policies. However, the pandemic-related uncertainties, high debts and forex woes are concerning.

In the past three months, the company’s shares have gained 4.8% compared with the industry’s growth of 7.3%.




 

Meanwhile, the Zacks Consensus Estimate for its earnings has been raised by 7.1% to $3.30 for fiscal 2020 (ended September 2020; results are awaited) and by 7.8% to $3.44 for fiscal 2021 (ending September 2021) in the past 60 days. Also, the consensus estimate for the fourth quarter of fiscal 2020 grew 4.4% to 94 cents per share.

Emerson Electric Co. Price and Consensus

 

Emerson Electric Co. Price and Consensus

Emerson Electric Co. price-consensus-chart | Emerson Electric Co. Quote

Stocks That Warrants a Look

Three better-ranked stocks in the industry are Regal Beloit Corporation (RBC - Free Report) , EnerSys (ENS - Free Report) and Franklin Electric Co., Inc. (FELE - Free Report) . While Regal Beloit sports a Rank #1 (Strong Buy), both EnerSys and Franklin Electric carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these companies have improved for the current year. Further, earnings surprise for the last reported quarter was 46.15% for Regal Beloit, 35.29% for EnerSys and 14.89% for Franklin Electric.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Published in