Synergies improving finances
In September 2012, Pentair, Ltd. Registered Share (NYSE:PNR) acquired Tyco International‘s flow-control unit for $4.9 billion. This unit focuses on water filtration and fluid solutions and equipment-protection products. This acquisition has helped Pentair, Ltd. Registered Share (NYSE:PNR) to serve developing nations, where rising GDP and urbanization are driving increasing demands for energy, infrastructure, and water. With this acquisition, it has become the leader in this segment.
It expects a total cumulative operating synergy of around $230 million by 2015. It had projected the synergy of $90 million in 2013, and $80 million has already been achieved. Therefore, it has raised the target for 2013 to $100 million. The remaining $20 million will be a gain from its lean initiatives, which have proved their potential in improving speed and reductions in non-value-added work, eliminating waste. With this lean initiative, the company expects further synergies of more than the initial target of $230 million in the future.
Pentair, Ltd. Registered Share (NYSE:PNR)’s valves and controls segment is contributing around 33% to its total revenue. In the first quarter it reported a year-over-year decline of 4%. This decline was mainly due to currency headwinds. The company is optimistic on the efficiency of its valves and controls and solutions, which it currently offers to oil and gas, power generation, and mining industries. Also, it expects the currency headwinds to be neutralized.
Its energy segment has reported a backlog growth of 7% year over year, and its mining segment has increased by 17% year over year in the first quarter ended in March 2013. With this, it expects revenue will reach $615 million in the second quarter and $651 million in the third quarter, from $586 billion in the first quarter of 2013.
Conclusion
Barnes Group Inc. (NYSE:B), with the acquisition of Synventive and the sale of its distribution segment, expects long-term growth opportunities.
Parker-Hannifin Corporation (NYSE:PH)’s new contract with Rolls-Royce represents its leadership efficiencies in the engine segment, and its share-repurchase plan will benefit investors.
Pentair, Ltd. Registered Share (NYSE:PNR), by acquiring Tyco’s flow-control segment, became the leader of this segment. The company, with growth in valves and controls segment backlogs, expects to generate higher revenue.
Therefore, I recommend a buy on these three companies.
The article Industrial Equipment Companies That Shouldn’t Be Missed for Long-Term Growth originally appeared on Fool.com and is written by Madhu Dube.
Madhu Dube has no position in any stocks mentioned. The Motley Fool owns shares of Pentair. Madhu is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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