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Applied Industrial Boosts Product Offerings With ACS Buyout

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Applied Industrial Technologies, Inc. (AIT - Free Report) recently announced that it has completed the acquisition of Advanced Control Solutions (“ACS”). Financial terms of the deal were kept under wraps. Applied Industrial's shares gained 2.3% yesterday, eventually closing the trading session at $58.87.

Headquartered in Marietta, GA, ACS is engaged in offering a comprehensive solution of automation products and services. The company’s customer base is mainly in Alabama, Mississippi, Georgia, Tennessee and South Carolina.

Inside the Headlines

The transaction is in sync with Applied Industrial's policy of acquiring businesses to gain access to new customers, regions and product lines. Notably, the ACS buyout will enable the company to strengthen and expand its range of automation solutions across various end markets, including life sciences, automotive, packaging & logistics, and industrial manufacturing.

Moreover, the acquisition complements Applied Industrial's buyout of Olympus Controls — an automation services provider — in August 2019. The automation solutions offered by Olympus Controls have been proving beneficial amid the pandemic.

Notably, in fourth-quarter fiscal 2020 (ended Jun 30, 2020), buyouts had a positive impact of 1.5% on the company’s sales.

Zacks Rank, Price Performance and Estimate Trend

The company, with a $2.3-billion market capitalization, currently carries a Zacks Rank #5 (Strong Sell). Owing to the uncertainties regarding the impact of the pandemic on its operating results, the company refrained from providing financial projections for fiscal 2021 (ending June 2021). For the first quarter of fiscal 2021 (ended September 2020), it expects organic sales decline of 17-18%, with a fall of mid-teens for Fluid Power & Flow Control segment and high-teens for Service Center-Based Distribution segment.

In the past three months, the company’s shares have declined 0.5% against the industry’s growth of 14.2%.

In the past 60 days, the Zacks Consensus Estimate for the company’s earnings has moved down 8.8% to $3.02 for fiscal 2021 on two downward estimate revisions against none upward. Over the same time frame, the consensus estimate for fiscal 2022 (ending June 2022) earnings has inched down 1.1% to $3.72 on one downward estimate revision against none upward.

Key Picks

Some better-ranked companies from the same space are EnPro Industries, Inc. (NPO - Free Report) , Altra Industrial Motion Corp. (AIMC - Free Report) and Dover Corporation (DOV - Free Report) . While EnPro currently sports a Zacks Rank #1 (Strong Buy), Altra Industrial and Dover carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EnPro delivered a positive earnings surprise of 248.29%, on average, in the trailing four quarters.

Altra Industrial delivered a positive earnings surprise of 31.43%, on average, in the trailing four quarters.  

Dover delivered a positive earnings surprise of 13.71%, on average, in the trailing four quarters.

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