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Meritor to Boost Components Business With AAG Acquisition

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Meritor, Inc. MTOR announced the acquisition of all the assets of Howell, MI-based AA Gear & Manufacturing, Inc. ("AAG") and its subsidiaries. The company will discuss details of the deal at its second-quarter 2018 earnings conference call on May 3.

AAG produces low-to-medium volume batch manufacturing for gear and shaft applications. Additionally, it offers prototyping solutions and emergency plant support. The company has varied customer range and includes few of world's leading manufacturers. Its end market consists of agriculture, construction, heavy truck and automotive.

The addition of all the assets of AAG in Meritor’s Components business will help the latter to boost technical capabilities and step up business growth.

Meritor, Inc. Price and Consensus

Meritor, Inc. Price and Consensus | Meritor, Inc. Quote

This acquisition is in line with the company’s M2019 plan to follow strategic growth initiatives and continue with its investments in new products and technologies.

Prior to the M2019 plan, the company successfully achieved its objectives stated in the M2016 plan. The plan was successful in enhancing operational excellence and lowering debt among other financial gains. It also obtained new customers, including PACCAR in North America, Scania in Europe, Daimler in India and DAF in South America.

Earlier, in September 2017, Meritor reportedly acquired the product portfolio and related technologies of Fabco Holdings, Inc. and its subsidiaries. The acquisition enabled the company to expand its portfolio of complementary products while broadening its customer base.

Price Performance

Year to date, Meritor’s stock has slumped 17.5%, underperforming the 2.5% decline of the industry it belongs to.

Zacks Rank & Stocks to Consider

Meritor carries a Zacks Rank #3 (Hold). A few other top-stocks in the auto space are Visteon Corporation VC, Wabash National Corporation WNC and Fiat Chrysler Automobiles N.V. FCAU. Visteon and Wabash National carry a Zacks Rank #2 while Fiat Chrysler sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Visteon has expected long-term growth rate of 16.6%. In the last three months, shares of the company have gained 3.8%.

Wabash National has expected long-term growth rate of 21.5%. Shares of the company have risen 5.2% in the last six months.

Fiat Chrysler has expected long-term growth rate of 23.7%. In the last six months, shares of the company have gained 24.8%.

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