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Emerson to Boost Hybrid Market Presence With GE Unit Buyout

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Emerson Electric Co. (EMR - Free Report) recently announced that it has inked an agreement to buy Intelligent Platforms — a division of General Electric Company (GE - Free Report) . With the help of Intelligent Platforms’ programmable logic controller (PLC) technologies, Emerson will be able to offer its customers broader control as well as management of their operations.

Based in Charlottesville, VA, Intelligent Platforms employs about 650 employees globally. The company offers industrial software, control systems as well as embedded computing platforms that support monitoring, analyzing and optimizing of operations.

The acquisition will enable Emerson to expand its opportunities in machine control and discrete applications across process industries as well as hybrid markets. Notably, Emerson’s advanced distributed control systems, coupled with Intelligent Platforms’ PLC technology will enable customers to connect “islands of automation” within the plant that would boost operational performance and safety.

Notably, the buyout is likely to be completed in the first half of fiscal 2019 (ending March 2019), depending on regulatory approvals as well as other customary closing conditions. However, the terms of the acquisition were kept under wraps.

Existing Business Scenario

Emerson is experiencing robust sales generated from mature and emerging end markets. Going forward, the company believes that increased turnaround activity, and ongoing mid and small-sized maintenance, repair and operations projects will bolster revenues of its Automation Solutions segment. On the other hand, continued growth in air conditioning demand will likely drive the top-line performance of the company's Commercial & Residential Solutions segment.

Moreover, the company’s ongoing restructuring and cost-reduction efforts, as well as greater operational efficacy are likely to drive its near-term profitability. In the past three months, this Zacks Rank #3 (Hold) company has returned 13.2%, outperforming the industry’s average gain of 10.3%.

However, material cost inflation remains a cause of concern for Emerson. As a matter of fact, the company expects inflation environment to persist even in the quarters ahead and plans to have more material containment on account of the same.

Stocks to Consider

A couple of better-ranked stocks from the same space are Eaton Corporation plc (ETN - Free Report) and Ideal Power Inc. (IPWR - Free Report) . Both the companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eaton surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 2.87%.

Ideal Power outpaced estimates thrice in the preceding four quarters, with an average earnings surprise of 18.09%.

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