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3M (MMM) Divests Operating Unit to Focus on Core Business
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Diversified industrial goods manufacturer 3M Company’s (MMM - Free Report) Traffic Safety and Security Division recently entered into an agreement to divest its tolling and automated license/number plate recognition business to Neology, Inc.
Headquartered in San Diego, CA, Neology is a leading provider of integrated solutions for tolling, electronic vehicle registration and public safety applications. The company is a subsidiary of SMARTRAC, a portfolio company managed by One Equity Partners, a middle-market private equity firm.
The business held for sale has annual global sales of approximately $40 million. The transaction is expected to close by the third quarter of 2017. On completion of the deal, approximately 85 employees are expected to join Neology.
3M has outperformed the Zacks categorized Diversified Operations industry driven by such focused growth initiatives, with an average return of 8.63% compared with 2.30% for the latter, over the last 90 days. The company is continuing with its portfolio restructuring efforts by divesting assets that no longer fit its strategy and continues to make investments in other lucrative markets. It divested its prescription eyewear business, part of the Personal Safety Division to HOYA Vision Care, a premier eyeglass lens provider across the globe, for an undisclosed amount. 3M decided to sell the business to focus on its core personal safety businesses. The company, however, retained its non-prescription eyewear business that is widely known as the plano eyewear.
In addition, to focus on its core business, the company divested its identity management business to Gemalto, an international digital security company. The business provides biometric hardware and software solutions that provide better security to its customers. It was part of 3M’s Traffic Safety and Security Division, which is an integral component of its Safety & Graphics segment. The business has annual global sales of around $215 million. It employs approximately 450 employees, who were absorbed by Gemalto.
Maplewood, MN-based 3M employs 90,000 people worldwide, with operations in more than 65 countries. It manufactures over 55,000 products, including adhesives, abrasives, laminates, passive fire protection, dental and orthodontic products, electronic materials, medical products, car-care products (sun films, polish, wax, car shampoo, treatment for the exterior, interior and the under chassis rust protection), electronic circuits, and optical films.
3M currently carries a Zacks Rank #2 (Buy). Some other stocks in the industry worth considering include Crane Co. (CR - Free Report) , Federal Signal Corporation (FSS - Free Report) and Hitachi, Ltd. (HTHIY - Free Report) . Crane and Federal Signal both carry the same Zacks Rank as 3M, whereas Hitachi sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Crane has a long-term earnings growth expectation of 10.1%. It topped estimates on all occasions in the trailing four quarters with an average positive earnings surprise of 8.41%.
Federal Signal is currently trading at a forward P/E of 22.2.
Hitachi has a long-term earnings growth expectation of 13% and is currently trading at a forward P/E of 10.5x.
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3M (MMM) Divests Operating Unit to Focus on Core Business
Diversified industrial goods manufacturer 3M Company’s (MMM - Free Report) Traffic Safety and Security Division recently entered into an agreement to divest its tolling and automated license/number plate recognition business to Neology, Inc.
Headquartered in San Diego, CA, Neology is a leading provider of integrated solutions for tolling, electronic vehicle registration and public safety applications. The company is a subsidiary of SMARTRAC, a portfolio company managed by One Equity Partners, a middle-market private equity firm.
The business held for sale has annual global sales of approximately $40 million. The transaction is expected to close by the third quarter of 2017. On completion of the deal, approximately 85 employees are expected to join Neology.
3M has outperformed the Zacks categorized Diversified Operations industry driven by such focused growth initiatives, with an average return of 8.63% compared with 2.30% for the latter, over the last 90 days. The company is continuing with its portfolio restructuring efforts by divesting assets that no longer fit its strategy and continues to make investments in other lucrative markets. It divested its prescription eyewear business, part of the Personal Safety Division to HOYA Vision Care, a premier eyeglass lens provider across the globe, for an undisclosed amount. 3M decided to sell the business to focus on its core personal safety businesses. The company, however, retained its non-prescription eyewear business that is widely known as the plano eyewear.
In addition, to focus on its core business, the company divested its identity management business to Gemalto, an international digital security company. The business provides biometric hardware and software solutions that provide better security to its customers. It was part of 3M’s Traffic Safety and Security Division, which is an integral component of its Safety & Graphics segment. The business has annual global sales of around $215 million. It employs approximately 450 employees, who were absorbed by Gemalto.
Maplewood, MN-based 3M employs 90,000 people worldwide, with operations in more than 65 countries. It manufactures over 55,000 products, including adhesives, abrasives, laminates, passive fire protection, dental and orthodontic products, electronic materials, medical products, car-care products (sun films, polish, wax, car shampoo, treatment for the exterior, interior and the under chassis rust protection), electronic circuits, and optical films.
3M currently carries a Zacks Rank #2 (Buy). Some other stocks in the industry worth considering include Crane Co. (CR - Free Report) , Federal Signal Corporation (FSS - Free Report) and Hitachi, Ltd. (HTHIY - Free Report) . Crane and Federal Signal both carry the same Zacks Rank as 3M, whereas Hitachi sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Crane has a long-term earnings growth expectation of 10.1%. It topped estimates on all occasions in the trailing four quarters with an average positive earnings surprise of 8.41%.
Federal Signal is currently trading at a forward P/E of 22.2.
Hitachi has a long-term earnings growth expectation of 13% and is currently trading at a forward P/E of 10.5x.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>