Emerson Electric Co. (EMR - Free Report) recently acquired ProSys, a global supplier of software and services that facilitates increased production and safety for chemical, pulp & paper, oil & gas, as well as refining industries. ProSys’ unique technologies and proficiency will enable Emerson to aid customers in improving plant performance, safety and profitability by optimizing human as well as automation resources.
Acquisition Rationale
The acquisition complements Emerson’s buyout of MYNAH Technologies in May 2017. ProSys’ portfolio consists of solutions that aid management of alarms crucial to plant production, as well as handling changing plant states.
ProSys’ software portfolio supports Emerson’s Operational Certainty program, which allows industrial companies to realize Top Quartile performance in areas such as safety, reliability as well as production. ProSys’ technologies, when combined with Emerson’s added expertise will enable operators to navigate plant systems safely and efficiently. This will also allow customers to accommodate the changing state and age of the industrial workforce.
Our Take
Emerson has been executing restructuring activities since 2015 to drive efficiency and growth. The company has taken a series of concerted efforts to develop a better brand with significant customer focus. It has also devised cost cutting and divestment plans to unlock greater benefits in the coming quarters. All of its segments garnered significant savings from restructuring actions. Notably, this Zacks Rank #3 (Hold) company has returned 22.1% in the past six months, outperforming the industry’s average gain of 11.6%.
The company’s ardent eye for acquisitions is anticipated to be conducive to core business. The company is on a constant lookout for small bolt-on and strategic acquisitions to restore sales, up to $20 billion and cash flow back to over $3.2 billion, over a span of next five years. Recently, the company completed the buyout of Pentair Valves & Controls and a business unit of Pentair plc. Further, the company expanded global capabilities in fresh food monitoring, with the acquisitions of Locus Traxx and PakSense. We believe such strategic buyouts will supplement the top-line performance, going forward. This apart, the company’s diligent efforts for launching new products and technologies helps it to gain a competitive advantage over peers.
However, the fact remains that, prolonged softness in the oil and gas markets has affected both capital spending and operational expenditure of clients, which in turn are hurting Emerson’s operations. Moreover, the company’s operations have been suffering as a result of slow spending in general industrial markets. This has affected its order rates across the related segments, consequently pulling down the company’s top line.
Stocks to Consider
Some better-ranked stocks from the same space include Deere & Company (DE - Free Report) , Barnes Group, Inc. (B - Free Report) and Donaldson Company, Inc. (DCI - Free Report) . While Deere & Company sports a Zacks Rank #1 (Strong Buy), Barnes Group and Donaldson Company carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deere & Company has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 19.5%.
Barnes Group has outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 9.0%.
Donaldson Company has surpassed estimates thrice in the preceding four quarters, with an average positive earnings surprise of 5.2%.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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Emerson Electric Co. (EMR - Free Report) recently acquired ProSys, a global supplier of software and services that facilitates increased production and safety for chemical, pulp & paper, oil & gas, as well as refining industries. ProSys’ unique technologies and proficiency will enable Emerson to aid customers in improving plant performance, safety and profitability by optimizing human as well as automation resources.
Acquisition Rationale
The acquisition complements Emerson’s buyout of MYNAH Technologies in May 2017. ProSys’ portfolio consists of solutions that aid management of alarms crucial to plant production, as well as handling changing plant states.
ProSys’ software portfolio supports Emerson’s Operational Certainty program, which allows industrial companies to realize Top Quartile performance in areas such as safety, reliability as well as production. ProSys’ technologies, when combined with Emerson’s added expertise will enable operators to navigate plant systems safely and efficiently. This will also allow customers to accommodate the changing state and age of the industrial workforce.
Our Take
Emerson has been executing restructuring activities since 2015 to drive efficiency and growth. The company has taken a series of concerted efforts to develop a better brand with significant customer focus. It has also devised cost cutting and divestment plans to unlock greater benefits in the coming quarters. All of its segments garnered significant savings from restructuring actions. Notably, this Zacks Rank #3 (Hold) company has returned 22.1% in the past six months, outperforming the industry’s average gain of 11.6%.
The company’s ardent eye for acquisitions is anticipated to be conducive to core business. The company is on a constant lookout for small bolt-on and strategic acquisitions to restore sales, up to $20 billion and cash flow back to over $3.2 billion, over a span of next five years. Recently, the company completed the buyout of Pentair Valves & Controls and a business unit of Pentair plc. Further, the company expanded global capabilities in fresh food monitoring, with the acquisitions of Locus Traxx and PakSense. We believe such strategic buyouts will supplement the top-line performance, going forward. This apart, the company’s diligent efforts for launching new products and technologies helps it to gain a competitive advantage over peers.
However, the fact remains that, prolonged softness in the oil and gas markets has affected both capital spending and operational expenditure of clients, which in turn are hurting Emerson’s operations. Moreover, the company’s operations have been suffering as a result of slow spending in general industrial markets. This has affected its order rates across the related segments, consequently pulling down the company’s top line.
Stocks to Consider
Some better-ranked stocks from the same space include Deere & Company (DE - Free Report) , Barnes Group, Inc. (B - Free Report) and Donaldson Company, Inc. (DCI - Free Report) . While Deere & Company sports a Zacks Rank #1 (Strong Buy), Barnes Group and Donaldson Company carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deere & Company has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 19.5%.
Barnes Group has outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 9.0%.
Donaldson Company has surpassed estimates thrice in the preceding four quarters, with an average positive earnings surprise of 5.2%.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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