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Aptiv (APTV) Acquires KUM, Boosts Asia Pacific Presence

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Aptiv PLC (APTV - Free Report) yesterday completed the purchase of South Korea-based provider of connectors and cable management solutions – KUM.

The buyout is also expected to boost Aptiv’s 2018 earnings per share (EPS). Notably, the company has raised its guidance for 2018. It now expects EPS for 2018 to be in the range of $5.20-$5.40 compared with the previously guided range of $5.00-$5.20.

A glimpse of the Aptiv’s price trend reveals that the stock has had an impressive run on the bourse last year. Shares of Aptiv have returned 20.7%, significantly outperforming the industry’s gain of 2.5%.

 

Enhanced Footprint in Asia Pacific

The acquisition is expected to complement Aptiv’s robust growth in the Asia-Pacific region. KUM will be integrated into Aptiv's existing Asia Pacific operations, thereby enriching its competitive position in Korea and China. Kevin Clark, president and chief executive officer at Aptiv, stated "KUM is a great fit for our business and strengthens our leadership position in Asia Pacific and engineered components."

With a geographically diverse revenue base, Aptiv is highly optimistic about growth opportunities from the Asia Pacific region. In 2017, it generated 28% of net sales from the region. Further, net sales from this region grew almost 26% to $3.54 billion from 2015-2017.

Signal and Power Solutions Should Grow

The buyout is likely to enhance Aptiv’s Signal and Power Solutions segment. This segment designs, manufactures and assembles vehicle’s electrical architecture, including engineered component products, wiring assemblies and harnesses, connectors, cable management, electrical centers, and hybrid high voltage and safety distribution systems.

In first-quarter 2018, this segment’s revenue increased 11.7% year-over-year to $2.6 billion, contributing 72% to total revenues.

Zacks Rank & Stocks to Consider

Currently, Aptiv has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Business Services sector include Delphi Technologies PLC , Blucora Inc., and Mastercard Incorporated (MA - Free Report) . All the stocks sport a Zacks Rank #1.

The long-term expected earnings per share growth rate for Delphi Technologies, Blucora and Mastercard is 10%, 20% and 19%, respectively.

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