Software-centric platform and systems provider National Instruments Corp. (NATI) has agreed to acquire Kratzer Automation’s test systems business, which provides electric vehicle (EV) solutions. Notably, the move bolsters NATI’s investments in vehicle electrification and expands its customer reach with original equipment manufacturers (OEMs).
NATI tests all the critical EV components, which includes the battery, inverter, and engine control. The ability to provide EV testing software as well as fully integrated test systems allows its customers to achieve scale. Moreover, the combined expertise of both the companies will help provide quicker responses to evolving market needs, while decreasing the total cost of testing for a diverse range of customers.
Management Weighs In
Drita Roggenbuck, Sr. Vice president and General Manager of NATI, commented, “The addition of the products, service capability and experienced team from Kratzer Automation AG will help strengthen our ability to provide complete customer-centric solutions direct to automotive OEMs and further expand our serviceable market and customer footprint in the fast-growing area of electrification.”
NATI is funding the acquisition via its existing revolving credit facility, and expects the transaction to close in the second quarter of 2022. The acquisition is estimated to be accretive in the second year as a result of revenue synergy, and bolsters NATI’s ability to reach its 2022 goal of 16% to 18% revenue growth.
Hedge Fund Activity
TipRanks data points that Wall Street’s top hedge funds have decreased holdings in National Instruments by 56,000 shares in the last quarter, indicating a negative hedge fund confidence signal in the stock.
Valuation Speaks
Let us consider some key metrics for NATI and how it fares against the broader industry. While the company’s forward non-GAAP P/E multiple of 19.08 is at par with the industry median of 19.85, its dividend yield of 2.7% is higher than the industry median of 1.4%, implying that investors can get higher returns in NATI as against its peers.
Further, a return on total capital of 6.2% indicates the company is better at deploying capital than its peers, where the median industry figure is 4.8%. Shares are down 6.6% so far this year.
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