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General Electric (GE) & Xignux's JV Unit to Buy SPX Transformer

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GE-Prolec Transformers, Inc. — a subsidiary of General Electric Company GE and Xignux, S.A. de C.V.’s joint venture unit — recently entered into a deal with SPX Corporation SPXC to buy SPX Transformer Solutions business. The buyout, which is expected to be completed by 2021-end subject to certain regulatory approvals, is valued at $645 million in cash.

Prolec GE is the joint venture between General Electric and Xignux.

SPX Transformer Solutions is engaged in providing power transformers in the United States as well as transformer services solutions and components. It is recognized for Waukesha transformers, as well as services and components. Notably, the company’s manufacturing facilities are based in Waukesha, WI, Goldsboro, NC, and Dallas, TX.

Benefits of the Buyout

The acquisition will enable Prolec GE to strengthen its position in electric power transmission, and distribution solutions space in the Americas. Notably, the combination of SPX Transformer Solutions’ proficiency in mid-sized transformer technology and Prolec GE’s expertise in small and larger-sized transformers will enable the latter to offer a comprehensive suite of sustainable energy solutions to its customers.

Separately, General Electric’s business unit GE Digital announced that its Smallworld Physical Network Inventory solution has been implemented by National Broadband Ireland. Notably, the solution has been implemented to model, manage, as well as streamline the execution of Ireland’s telecommunications project — the National Broadband Plan.

Zacks Rank, Price Performance and Earnings Estimate Trend

The company, with $122-billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is poised to gain from its portfolio-restructuring program, expansion in digital business and efforts to deleverage balance sheet in the quarters ahead. However, the persistence of market-related challenges in Aviation as well as weakness in the onshore wind market in the United States might be concerning in the near term.

General Electric’s shares have gained 11.9% compared with 9.7% growth recorded by the industry in the past three months.

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Zacks Investment Research

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The Zacks Consensus Estimate for second-quarter 2021 earnings has increased 33.3% to 4 cents in the past 60 days. Also, estimates for 2021 have increased 8.3% to 26 cents during the same period.

Key Picks

A couple of better-ranked stocks from the same space are Griffon Corporation GFF and Macquarie Infrastructure Company MIC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Griffon delivered an earnings surprise of 50.00% in the last reported quarter.

Macquarie delivered an earnings surprise of 25.00% in the last reported quarter.

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General Electric Company (GE) : Free Stock Analysis Report

Macquarie Infrastructure Company (MIC) : Free Stock Analysis Report

SPX Corporation (SPXC) : Free Stock Analysis Report

Griffon Corporation (GFF) : Free Stock Analysis Report

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