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Emerson Electric Co. (EMR - Free Report) , on Mar 11, announced that it has completed the acquisition of Verdant, a leading provider of energy management solutions. Yesterday, the company’s share price decreased 11.4%, closing the trading session at $46.18 per share.
Notably, the buyout will enable Emerson to strengthen its portfolio of thermostat and sustainability solutions for the hotel and hospitality industries.
Verdant’s portfolio consists of market leading products and services that integrate cutting-edge occupancy and thermal sensing technologies with real-time analytics. This allows hotel operators to optimize energy settings, reduce consumption level and increase cost savings.
Acquisition Rationale
The acquisition complements Emerson’s digital analytics and broad services capabilities. As noted byEmerson, the addition of Verdant’s cloud-based intelligence platform to its portfolio of Sensi products and commercial building controls will enable it to aid customers in optimizing their operational performance and boost energy efficiencies. Moreover, with expanded product offerings in the energy efficiency domain, the company will serve a stronger customer base in new markets.
Our Take
Emerson’s ardent eye for acquisitions is anticipated to be conducive to core business. Notably, the company used $469 million and $73 million for making acquisitions (net of cash acquired) in fiscal 2019 (ended September 2019) and first quarter of fiscal 2020 (ended December 2019), respectively. Acquired assets boosted its sales by 1% in the fourth quarter of fiscal 2019 (ended September 2019) and first quarter of fiscal 2020.
Also, the Zacks Rank #2 (Buy) company is experiencing continued strength across most key process and hybrid end markets in the Americas and Europe region as well as healthy demand in Asia, Middle East & Africa region. Solid growth in the company’s long cycle businesses, supported by strength across final control and systems businesses, is likely to augment top-line performance in the quarters ahead. In addition, robust backlog level at its Automation Solutions segment and increased bookings for several large liquefied natural gas projects are likely to boost its revenues.
Moreover, the company’s focus on rewarding shareholders handsomely through dividends and share repurchases will work in its favor. It repurchased shares worth $129 million in fiscal first quarter apart from dividend disbursement of $305 million. It is worth noting that in November 2019, the company hiked annual dividend rate by 4 cents for fiscal 2020. Going forward, it intends to provide higher returns on the back of stronger free cash flow generation.
However, it is witnessing persistent weakness in the global discrete manufacturing and North American upstream oil and gas end markets. In the past month, the company has lost 37.2% compared with the industry’s decline of 23.1%.
Graco delivered positive earnings surprise of 0.40%, on average, in the trailing four quarters.
Dover delivered positive earnings surprise of 5.36%, on average, in the trailing four quarters.
Regal Beloit’s earnings surprise in the last reported quarter was 0.81%.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. 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.
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Emerson Acquires Verdant, Strengthens Product Portfolio
Emerson Electric Co. (EMR - Free Report) , on Mar 11, announced that it has completed the acquisition of Verdant, a leading provider of energy management solutions. Yesterday, the company’s share price decreased 11.4%, closing the trading session at $46.18 per share.
Notably, the buyout will enable Emerson to strengthen its portfolio of thermostat and sustainability solutions for the hotel and hospitality industries.
Verdant’s portfolio consists of market leading products and services that integrate cutting-edge occupancy and thermal sensing technologies with real-time analytics. This allows hotel operators to optimize energy settings, reduce consumption level and increase cost savings.
Acquisition Rationale
The acquisition complements Emerson’s digital analytics and broad services capabilities. As noted byEmerson, the addition of Verdant’s cloud-based intelligence platform to its portfolio of Sensi products and commercial building controls will enable it to aid customers in optimizing their operational performance and boost energy efficiencies. Moreover, with expanded product offerings in the energy efficiency domain, the company will serve a stronger customer base in new markets.
Our Take
Emerson’s ardent eye for acquisitions is anticipated to be conducive to core business. Notably, the company used $469 million and $73 million for making acquisitions (net of cash acquired) in fiscal 2019 (ended September 2019) and first quarter of fiscal 2020 (ended December 2019), respectively. Acquired assets boosted its sales by 1% in the fourth quarter of fiscal 2019 (ended September 2019) and first quarter of fiscal 2020.
Also, the Zacks Rank #2 (Buy) company is experiencing continued strength across most key process and hybrid end markets in the Americas and Europe region as well as healthy demand in Asia, Middle East & Africa region. Solid growth in the company’s long cycle businesses, supported by strength across final control and systems businesses, is likely to augment top-line performance in the quarters ahead. In addition, robust backlog level at its Automation Solutions segment and increased bookings for several large liquefied natural gas projects are likely to boost its revenues.
Moreover, the company’s focus on rewarding shareholders handsomely through dividends and share repurchases will work in its favor. It repurchased shares worth $129 million in fiscal first quarter apart from dividend disbursement of $305 million. It is worth noting that in November 2019, the company hiked annual dividend rate by 4 cents for fiscal 2020. Going forward, it intends to provide higher returns on the back of stronger free cash flow generation.
However, it is witnessing persistent weakness in the global discrete manufacturing and North American upstream oil and gas end markets. In the past month, the company has lost 37.2% compared with the industry’s decline of 23.1%.
Other Stocks to Consider
Some other top-ranked stocks from the Zacks Industrial Products sector are Graco Inc. (GGG - Free Report) , Dover Corporation (DOV - Free Report) and Regal Beloit Corporation (RBC - Free Report) . While Graco sports a Zacks Rank #1 (Strong Buy), Dover and Regal Beloit carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Graco delivered positive earnings surprise of 0.40%, on average, in the trailing four quarters.
Dover delivered positive earnings surprise of 5.36%, on average, in the trailing four quarters.
Regal Beloit’s earnings surprise in the last reported quarter was 0.81%.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. 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 2020 today >>