Aptiv (APTV) Will Gain from Wind River Acquisition: Here’s How

Aptiv PLC APTV recently announced that it has signed an agreement to purchase Wind River from TPG Capital, the private equity platform of TPG’s global alternative asset management firm, for $4.3 billion in cash. Subject to customary conditions (including receipt of appropriate regulatory approvals), the transaction is expected to close in mid-2022.

Wind River is a provider of intelligent edge software solutions. Its software enables the safe development, deployment, operation and servicing of mission-critical intelligent systems. This edge cloud software portfolio spans the aerospace and defense, telecommunications, industrial and automotive markets. Wind River generated nearly $400 million in revenue in 2021.

Aptiv stock has risen 10% over the past year, compared with a decline of 49.8% in its industry. The Zacks S&P 500 Index has risen 25.4% during the same period.

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How will Aptiv benefit?

The acquisition will combine Wind River Studio’s offering with Aptiv’s complementary SVA platform and automotive expertise, helping Aptiv strengthen its position in the automotive software solutions market.

Wind River will continue to operate as a standalone company within Aptiv as part of the Advanced Safety & User Experience (AS&UX) segment. Wind River will continue to be led by Kevin Dallas.

Given the changes happening in the automotive industry, the transaction appears to be a strategic move by Aptiv. It represents Aptiv’s transformation toward an edge-based, software-defined future.

Kevin Clark, President and CEO of Aptiv, said, “With Aptiv and Wind River’s synergistic technologies and decades of experience delivering safety-critical systems, we will accelerate this journey toward a software-defined future for the automotive industry. Additionally, we are committed to further strengthening Wind River’s competitive position across the many industries it serves. We look forward to welcoming Wind River’s world-class team to the Aptiv family as we continue to work toward a safer, greener and more connected world.”

Zacks Rank and Stocks to Consider

Aptiv currently has a Zacks Rating #5 (Strong Sell).

You can see complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some higher-profile stocks in the broader business services sector include: Avis Budget CAR, Nationwide Health Care (CCRN)) I Accenture (ACN), each with a Zacks Rank of 1.

Avis Budget has an expected earnings growth rate of 420.6% for the current year. The company has an average earnings surprise of 76.9% for the last four quarters.

Avis Budget shares are up 744.3% in the past year. The company has long-term earnings growth of 19.4%.

For the current year, Cross Country Healthcare expects earnings growth of 447.8%. The company’s results for the last four quarters are surprising on average at the level of 75%.

Cross Country Healthcare shares are up 201% over the past year. The company has a long-term earnings growth rate of 21.5%.

Accenture expects earnings growth of 19.7% this year. The company surprises with results for the last four quarters averaging 5.3%.

Accenture shares are up 43.2% in the past year. The company records long-term profit growth of 10%.

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