Zebra Technologies Corporation ZBRA yesterday announced that it bought Dedham, MA-based Reflexis Systems, Inc. The transaction — valued at $575 million — was announced by the company on Jul 28, 2020.
Shares of Zebra gained 2.5% yesterday, ending the trading session at $294.36.
Reflexis Systems specializes in providing workforce communication, management and execution solutions. Its offerings are used widely in food service, banking, retail and hospitality industries. One of its popular offerings is the Reflexis ONE™ intelligent work platform.
It has presence in Pune, London, Atlanta, Columbus, Dusseldorf and other regions. In 2019, Reflexis Systems generated revenues of $66 million.
Discussion on Buyout
As noted, Zebra funded the acquisition price with available cash and liquidity under its revolving credit facility. The acquired business will be integrated with Zebra’s Enterprise Visibility & Mobility (“EVM”) segment.
The EVM segment deals with data capture and automatic information solutions. Its offerings — including mobile computing, RFID, data capture and others — are used in manufacturing, retail, healthcare, e-commerce, transportation and other end markets. The segment generated revenues of $681 million in second-quarter 2020, representing 71.2% of the company’s total sales generated in the second quarter.
It believes that the buyout will help strengthen efforts to provide effective solutions to customers in retail and other industries — wherein their front-line workers can have the advantage of having real-time data. Further, Reflexis Systems’ solid customer base and technological expertise will prove to be a boon for Zebra.
Reflexis Systems’ solutions will precisely complement Zebra’s existing software offerings — including SmartCount, Zebra Prescriptive Analytics and Workforce Connect.
Zebra anticipates that Reflexis Systems’ buyout will have no impact on earnings in the first year of the completion of the transaction. Beyond the first year, earnings accretion is expected.
Zacks Rank, Price Performance and Estimate Trend
With a market capitalization of $15.3 billion, Zebra currently carries a Zacks Rank #2 (Buy). The company is expected to gain from rising preferences for automation and the digitization of workflows in the longer term. A solid backlog and efforts to reduce costs might help deal with the pandemic-led woes.
In the past three months, the stock has rallied 12.7% compared with the industry’s growth of 13.1%.
Also, the Zacks Consensus Estimate for its 2020 earnings is pegged at $11.19 and the same for 2021 stands at $13.92, implying an increase of 1.4% and a decrease of 1.7% from the respective 60-day-ago figures. Further, the consensus estimate for third-quarter earnings is pegged at $2.82, suggesting growth of 2.9% from the 60-day-ago figure.
Zebra Technologies Corporation Price and Consensus
Zebra Technologies Corporation price-consensus-chart | Zebra Technologies Corporation Quote
Other Stocks to Consider
Three other top-ranked stocks in the Zacks Industrial Products sector are Tennant Company TNC, Altra Industrial Motion Corp. AIMC and Pentair plc PNR. While Tennant and Altra Industrial currently sport a Zacks Rank #1 (Strong Buy), Pentair carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for these companies have improved for the current year. Further, earnings surprise for the last reported quarter was 380.00% for Tennant, 76.47% for Altra Industrial and 8.33% for Pentair.
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