FLIR Systems (FLIR) Acquires Endeavor Robotic for $382M

FLIR Systems, Inc. FLIR has acquired Endeavor Robotic Holdings from Arlington Capital Partners for $382 million in cash. Notably, the completion of this deal is in line with the company’s long-term strategy to invest and thereby expand its market share in areas including unmanned solutions and intelligent transportation systems.

The transaction is expected to deduct 3 cents from the acquirer’s 2019 adjusted earnings per share due to borrowing costs associated with funding the buyout, and accretive thereafter.  

Rationale Behind the Deal

Increasing demand for enhanced efficiency, human safety as well as an escalation of terrorist attacks have been driving the demand for unmanned ground vehicles (UGVs). During the 2018-2025 period, the UGVs market is estimated to witness a CAGR of 14.8% to reach a value worth $7 billion by 2025 (as per Research and Markets).

Notably, Endeavor Robotic is a leading developer of combat proven, tactical UGVs for the global military, public safety and critical infrastructure markets. Having shipped more than 7,000 UGVs to customers across 55 countries, Endeavor is currently one of the largest UGV providers to the US Department of Defense.

With FLIR Systems already being a seasoned player in the unmanned solutions area and the UGV market expanding rapidly, it’s natural for the company to explore its prospects in the UGV space. Undoubtedly, the addition of an experienced UGV manufacturer like Endeavor to its portfolio will allow FLIR Systems to capture more shares of the concerned market.

FLIR Systems on Acquisition Spree

In a bid to strengthen its product portfolio, FLIR Systems follows a trend of pursuing notable mergers and acquisitions. In this regard, it is imperative to mention that the company has already inked two buyout deals in 2019, including the Endeavor acquisition. Interestingly, both of them are related to unmanned solutions. In January, FLIR Systems acquired Aeryon Labs for $200 million. The acquiree is a leading provider of high-performance unmanned aerial systems (UAS) solutions.

No doubt, the addition of Aeryon and Endeavor will significantly help FLIR Systems to be a leader in unmanned solutions. Both these buyouts are expected to be accretive to FLIR Systems’ earnings in 2020.

Price Movement

Shares of FLIR Systems have gained 13.4% in the past three months.

Zacks Rank & Stocks to Consider

FLIR Systems currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same sector are The Boeing Company BA, Spirit Aerosystems Holdings SPR and Heico Corporation HEI. While Boeing and Spirit Aerosystems sport a Zacks Rank #1 (Strong Buy), Heico carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boeing delivered average positive earnings surprise of 17.08% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has moved 11.3% north to $20.13 over the past 90 days.

Spirit Aerosystems’ estimated long-term growth earnings rate currently stands at 7.80%. The Zacks Consensus Estimate for 2019 earnings has climbed 2.47% to $7.47 over the past 90 days.

Heico Corporation’s estimated long-term earnings growth is projected at 12.10%. The Zacks Consensus Estimate for 2019 earnings has moved 4% north to $2.08 over the past 90 days.

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