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3M Boosts Personal Safety Business With Scott Safety Buyout
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Diversified industrial goods manufacturer 3M Company (MMM - Free Report) recently completed the acquisition of Scott Safety from Johnson Controls International plc (JCI - Free Report) for an enterprise value of $2 billion. The strategic transaction will augment 3M’s Personal Safety business as it aims to maintain customer relevance through sustained portfolio restructuring efforts.
Scott Safety: A Brief Profile
Headquartered in Monroe, NC, Scott Safety manufactures innovative respiratory and personal protective equipment and safety devices for firefighters, industrial workers, police squads, militaries, homeland security forces and rescue teams around the world. These include self-contained breathing apparatus, supplied air and air-purifying respirators, gas and flame detection instruments, thermal imaging cameras, and firefighter communications and accountability devices.
Scott Safety’s products help protect thousands of individuals each day from environmental hazards like smoke, toxic fumes, combustible gases, falling objects and contaminants. With five manufacturing facilities across the globe, the business generated revenues of approximately $575 million for the 12 months ended Sep 30, 2017.
Strategic Benefits
3M has a well established Personal Safety business within the Safety and Graphics segment. It offers respiratory, hearing and fall protection solutions to improve the safety and health of workers in all types of industries and workforce environments. With the acquisition of Scott Safety, 3M will be able to provide a wide array of safety products and solutions to customers worldwide, attracting new customers as well as generating more sales from its existing clientele. This is likely to improve its top line in the long term, although it might be dilutive to earnings by 8 cents in the fourth quarter.
Moving Forward
Over the years, the company has continuously pruned its businesses to improve customer relevance, productivity and speed through a leaner operating structure. At the same time, 3M has acquired profitable businesses and maintained a steady investment in R&D to develop innovative products. With a diligent execution of operational plans, 3M has outperformed the industry with an average year-to-date return of 21.3% as against a decline of 0.2% for the latter.
3M's global footprint, diversified product portfolio and ability to penetrate in different markets have been its forte. For the five-year period of 2016-2020, 3M expects 8-11% growth in earnings per share driven by an organic sales growth of 2-5%. It expects about 20% return on invested capital during this tenure with a free cash flow conversion rate of 100%. Furthermore, 3M is standardizing its business processes through a new, global ERP system. The company expects these efforts to result in $500 to $700 million in annual operational savings by 2020 and an additional $500 million reduction in working capital.
Federal Signal has beaten earnings estimates thrice in the trailing four quarters with an average positive surprise of 9.5%.
Honeywell has a long-term earnings growth expectation of 9.5%. It has beaten earnings estimates thrice in the trailing four quarters with an average positive surprise of 2.1%.
4 Stocks to Watch after the Massive Equifax Hack
Cybersecurity stocks spiked on recent news of a data breach affecting 143 million Americans. But which stocks are the best buy candidates right now? And what does the future hold for the cybersecurity industry?
Equifax is just the most recent victim. Computer hacking and identity theft are more common than ever. Zacks has just released Cybersecurity! An Investor’s Guide to inform Zacks.com readers about this $170 billion/year space. More importantly, it highlights 4 cybersecurity picks with strong profit potential.
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3M Boosts Personal Safety Business With Scott Safety Buyout
Diversified industrial goods manufacturer 3M Company (MMM - Free Report) recently completed the acquisition of Scott Safety from Johnson Controls International plc (JCI - Free Report) for an enterprise value of $2 billion. The strategic transaction will augment 3M’s Personal Safety business as it aims to maintain customer relevance through sustained portfolio restructuring efforts.
Scott Safety: A Brief Profile
Headquartered in Monroe, NC, Scott Safety manufactures innovative respiratory and personal protective equipment and safety devices for firefighters, industrial workers, police squads, militaries, homeland security forces and rescue teams around the world. These include self-contained breathing apparatus, supplied air and air-purifying respirators, gas and flame detection instruments, thermal imaging cameras, and firefighter communications and accountability devices.
Scott Safety’s products help protect thousands of individuals each day from environmental hazards like smoke, toxic fumes, combustible gases, falling objects and contaminants. With five manufacturing facilities across the globe, the business generated revenues of approximately $575 million for the 12 months ended Sep 30, 2017.
Strategic Benefits
3M has a well established Personal Safety business within the Safety and Graphics segment. It offers respiratory, hearing and fall protection solutions to improve the safety and health of workers in all types of industries and workforce environments. With the acquisition of Scott Safety, 3M will be able to provide a wide array of safety products and solutions to customers worldwide, attracting new customers as well as generating more sales from its existing clientele. This is likely to improve its top line in the long term, although it might be dilutive to earnings by 8 cents in the fourth quarter.
Moving Forward
Over the years, the company has continuously pruned its businesses to improve customer relevance, productivity and speed through a leaner operating structure. At the same time, 3M has acquired profitable businesses and maintained a steady investment in R&D to develop innovative products. With a diligent execution of operational plans, 3M has outperformed the industry with an average year-to-date return of 21.3% as against a decline of 0.2% for the latter.
3M's global footprint, diversified product portfolio and ability to penetrate in different markets have been its forte. For the five-year period of 2016-2020, 3M expects 8-11% growth in earnings per share driven by an organic sales growth of 2-5%. It expects about 20% return on invested capital during this tenure with a free cash flow conversion rate of 100%. Furthermore, 3M is standardizing its business processes through a new, global ERP system. The company expects these efforts to result in $500 to $700 million in annual operational savings by 2020 and an additional $500 million reduction in working capital.
Zacks Rank & Key Picks
3M presently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Federal Signal Corporation (FSS - Free Report) and Honeywell International Inc. (HON - Free Report) , both carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Federal Signal has beaten earnings estimates thrice in the trailing four quarters with an average positive surprise of 9.5%.
Honeywell has a long-term earnings growth expectation of 9.5%. It has beaten earnings estimates thrice in the trailing four quarters with an average positive surprise of 2.1%.
4 Stocks to Watch after the Massive Equifax Hack
Cybersecurity stocks spiked on recent news of a data breach affecting 143 million Americans. But which stocks are the best buy candidates right now? And what does the future hold for the cybersecurity industry?
Equifax is just the most recent victim. Computer hacking and identity theft are more common than ever. Zacks has just released Cybersecurity! An Investor’s Guide to inform Zacks.com readers about this $170 billion/year space. More importantly, it highlights 4 cybersecurity picks with strong profit potential.
Get the new Investing Guide now>>