GE Aviation, an operating unit of General Electric CompanyGE , recently augmented its leading position in the market with the strategic acquisition of AirVault, for an undisclosed amount. Airvault is a privately-owned supplier of cloud-based digital records management. The transaction will enable GE Aviation to better serve its existing clients and optimize its operations for higher productivity.
With data center operations in Dallas and Oklahoma City, AirVault offers ECM (enterprise content management) applications to carriers across the world. The company provides specialized tools and applications for document workflow, distribution, verification, and collaboration, managing maintenance records for more than 50% of the North American commercial aircraft fleet and 20% globally. About seven billion maintenance records from over 40 major airlines and global MRO (maintenance, repair and overhaul) service providers are managed by AirVault in a private, secure cloud hosted at its data centers for access by 40,000 users worldwide.
Such record management capability will facilitate GE Aviation to develop key insights and optimize operations over a wide range of aviation applications. GE Aviation intends to leverage Predix - its cloud platform for the Industrial Internet - to boost domain expertise in flight analytics and engine diagnostics. In addition, it aims to integrate Predix with AirVault's web-based fleet maintenance records management across the aviation ecosystem to improve clients' operational efficiency.
GE Aviation offers commercial and military jet engines as well as components and aftermarket services. The acquisition is likely to boost the overall revenues of its parent firm, General Electric and lift its sagging shares. This Zacks Rank #3 (Hold) stock underperformed the Zacks categorized Diversified Operations industry in the last three months with a decline of 7.2% as against a gain of 0.7% for the latter.
Although General Electric is taking prudent steps to limit its financial exposure by divesting GE Capital assets, it is still susceptible to various market risks. The company's objectives of simplification and productivity improvement pose operational execution risks as well. For a company as large as General Electric, the additional revenues needed for growth are also quite large, posing a challenge in developing businesses on such a vast scale.
Some better-ranked stocks in the industry include Hitachi, Ltd. HTHIY , Honeywell International Inc. HON and LSB Industries, Inc. LXU , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Hitachi has a long-term earnings growth expectation of 13% and is currently trading at a forward P/E of 13.3x.
Honeywell has a long-term earnings growth expectation of 9.3%. The company surpassed earnings estimates thrice in the trailing four quarters with an average surprise of 1.9%.
LSB Industries has a long-term earnings growth expectation of 12%.
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