Rockwell Automation, Inc. (ROK Quick QuoteROK - Free Report) recently completed the acquisition of Plex Systems for a cash payment of $2.22 billion. The deal will aid in expanding the company’s cloud solutions offerings to industrial customers.

The company had entered into this agreement on Jun 28. Plex is a leader in cloud-delivered smart manufacturing solutions, and offers only single-instance, multi-tenant Software-as-a-Service (SaaS) manufacturing platform operating at scale, including innovative manufacturing execution systems, quality, and supply-chain management capabilities. The company’s manufacturing platform helps customers connect, automate, track, and analyze their operations and connected supply chains.

The buyout will boost Rockwell Automation’s software revenue growth and strengthen its annual recurring revenue streams. In fact, it will aid the company’s strategy to grow Connected Enterprise, while supporting customers’ increasing preference to adopt cloud solutions over industrial applications in order to enhance agility, resilience and sustainability in their operations. Plex’s cloud technology combined with Rockwell Automation’s software solutions will offer cloud-native solutions to customers that are easy to implement, use and maintain.

Last December, Rockwell Automation acquired Toronto-based Fiix Inc., which is a privately-held, AI enabled computerized maintenance management system (CMMS) company. This acquisition will aid Rockwell’s customers in monitoring and improving their assets performance, and optimizing maintenance work. Along with this, the Plex buyout is an ideal fit for customers in life sciences and consumer packaged goods industries, which are focused on meeting consumer expectations in product quality, safety and sustainability.

Plex will be reported under Rockwell Automation’s Software and Control operating segment, which provides hardware and software solution offerings for the design, operation, and maintenance of production automation and management systems.

Rockwell Automation is well-poised to benefit from its focus on broadening the portfolio of hardware and software products, solutions and services. The company’s FactoryTalk Design Hub development in order to streamline automation system design is progressing well.  Significant investments to globalize manufacturing, product development, building channel capability and partner network will drive growth. The company is likely to witness above-market growth by expanding its served markets and improving offerings. Higher levels of infrastructure spending and a growing middle-class population will fuel demand for consumer products in emerging markets. This will require manufacturing investment and provide the company with additional growth opportunities. Rockwell Automation is focused on buyouts that will augment its information solutions and high-value services offerings and capabilities, while expanding global presence.

Share Price Performance

So far this year, Rockwell Automation’s shares have gained 32%, outperforming the industry’s growth of 28.5%.

Image Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

Rockwell Automation currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector include Encore Wire Corporation (WIRE Quick QuoteWIRE - Free Report) , Terex Corporation (TEX Quick QuoteTEX - Free Report) and Lincoln Electric Holdings, Inc. (LECO Quick QuoteLECO - Free Report) While Encore Wire and Terex sport a Zacks Rank #1 (Strong Buy), Lincoln Electric carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. So far this year, the company’s shares have gained 45%.

Terex has an estimated earnings growth rate of 2,207.6% for 2021. The company’s shares have gained 47.4% so far this year.

Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. The stock has appreciated 22%, year to date.