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Emerson Electric Company (EMR)
NYSE:EMR
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Emerson Electric Company
(NYSE:EMR)
73Outperform
Positive Factors
Financial Performance
Earnings could be more resilient given the company's strong underlying profitability and meaningful self-help opportunities.
Growth Opportunities
There is a significant opportunity in LNG with over $1B in potential orders expected over the next few years, indicating future revenue growth.
Market Position
Continued global investment in end markets such as Power and Energy, in which EMR is competitively advantaged, should remain tailwinds for the company.
Negative Factors
Guidance and Forecasts
EMR organic guidance is viewed as overly aggressive with management calling for a high single-digit organic exit rate, a sharp acceleration despite sluggish order trends and softening Process capex.
Order Trends
Underlying orders growth decelerated to +1% y/y from +2% last quarter, raising investor concerns.
Tariff Impact
Tariffs are a $245mn headwind to FY25, or 2.5% of revenue on an annualized basis.
Emerson Electric Company (EMR) vs. S&P 500 (SPY)
Market Cap
$67.84B
Dividend Yield1.75%
Average Volume (3M)3.28M
Price to Earnings (P/E)28.8
Beta (1Y)1.20
Revenue Growth6.49%
EPS Growth24.14%
CountryUS
Employees73,000
SectorIndustrials
Sector Strength91
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)1.48
Shares Outstanding562,500,000
10 Day Avg. Volume3,459,206
30 Day Avg. Volume3,279,402
Financial Highlights & Ratios
PEG Ratio1.13
Price to Book (P/B)3.01
Price to Sales (P/S)0.00
P/FCF Ratio18.69
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$133.09Price Target Upside10.35% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Emerson Electric Company Business Overview & Revenue Model
Company DescriptionEmerson Electric Co., a technology and engineering company, provides various solutions for customers in industrial, commercial, and residential markets in the Americas, Asia, the Middle East, Africa, and Europe. The company operates through Automation Solutions, and Commercial & Residential Solutions segments. The Automation Solutions segment offers measurement and analytical instrumentation, industrial valves and equipment, and process control software and systems. It serves oil and gas, refining, chemicals, power generation, life sciences, food and beverage, automotive, pulp and paper, metals and mining, and municipal water supplies markets. The Commercial & Residential Solutions segment offers residential and commercial heating and air conditioning products, such as reciprocating and scroll compressors; system protector and flow control devices; standard, programmable, and Wi-Fi thermostats; monitoring equipment and electronic controls for gas and electric heating systems; gas valves for furnaces and water heaters; ignition systems for furnaces; sensors and thermistors for home appliances; and temperature sensors and controls. It also provides reciprocating, scroll, and screw compressors; precision flow controls; system diagnostics and controls; and environmental control systems. In addition, this segment offers air conditioning, refrigeration, and lighting control technologies, as well as facility design and product management, site commissioning, facility monitoring, and energy modeling services; tools for professionals and homeowners; and appliance solutions. Emerson Electric Co. was incorporated in 1890 and is headquartered in Saint Louis, Missouri.
How the Company Makes MoneyEmerson Electric Company generates revenue through the sale of its products and services within its two main business segments. The Automation Solutions segment offers industrial automation products, control systems, and software that help industries optimize processes, reduce waste, and improve safety. This segment caters to sectors such as oil and gas, chemical, and power generation. The Commercial & Residential Solutions segment provides climate technologies, including heating, ventilation, air conditioning (HVAC) systems, and refrigeration products, as well as tools and home products for residential and commercial customers. Emerson's earnings are further supported by strategic partnerships and a strong global distribution network, which enhance its market presence and customer reach.
Emerson Electric Company Financial Statement Overview
Summary
Emerson Electric Company demonstrates financial stability with strong cash flow generation and prudent debt management. Despite operational challenges impacting EBIT, profitability and cash position remain strong, supporting potential future growth.Income Statement
Emerson Electric Company has a strong gross profit margin of 43.3% and a good net profit margin of 13.8% for the TTM. However, the EBIT margin is negative, indicating operational challenges. Revenue growth is modest at 0.3% annually, suggesting stability with limited growth.75
Positive
Balance Sheet
The company maintains a solid debt-to-equity ratio of 0.29, indicating prudent leverage management. The return on equity stands at 9.2%, showing decent profitability for shareholders. The equity ratio of 61.9% reflects a strong capital structure, minimizing financial risk.80
Positive
Cash Flow
Emerson Electric exhibits robust free cash flow growth of 12.2% and a high free cash flow to net income ratio of 1.35. The operating cash flow to net income ratio of 1.53 indicates strong cash generation relative to net income, supporting financial flexibility.85
Very Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 17.55B | 17.49B | 15.16B | 19.63B | 18.24B | 16.79B | Gross Profit |
| 5.66B | 8.88B | 7.43B | 8.19B | 7.56B | 7.01B | EBIT |
| 80.00M | 2.67B | 2.83B | 3.88B | 3.22B | 2.49B | EBITDA |
| 4.61B | 4.03B | 4.04B | 3.50B | 4.05B | 3.36B | Net Income Common Stockholders |
| 2.41B | 1.97B | 13.22B | 3.23B | 2.30B | 1.97B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 2.83B | 3.59B | 8.05B | 1.80B | 2.35B | 3.31B | Total Assets |
| 42.61B | 44.25B | 42.75B | 35.67B | 24.71B | 22.88B | Total Debt |
| 7.62B | 8.20B | 8.16B | 10.37B | 6.67B | 7.49B | Net Debt |
| 4.79B | 4.61B | 106.00M | 8.57B | 4.31B | 4.17B | Total Liabilities |
| 16.23B | 16.74B | 16.15B | 19.36B | 14.79B | 14.44B | Stockholders Equity |
| 20.49B | 21.64B | 20.69B | 10.36B | 9.92B | 8.45B |
| Cash Flow | Free Cash Flow | ||||
| 3.27B | 2.91B | 274.00M | 2.39B | 2.99B | 2.54B | Operating Cash Flow |
| 3.69B | 3.33B | 637.00M | 2.92B | 3.58B | 3.08B | Investing Cash Flow |
| 2.95B | -5.36B | 12.41B | -5.33B | -2.12B | -740.00M | Financing Cash Flow |
| -5.80B | -2.46B | -6.82B | 2.05B | -2.42B | -509.00M |
Emerson Electric Company Technical Analysis
Positive
120.61
Price Trends
107.82
Positive
115.42
Positive
113.91
Positive
Market Momentum
3.99
Negative
70.89
Negative
86.35
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EMR, the sentiment is Positive. The current price of 120.61 is above the 20-day moving average (MA) of 109.05, above the 50-day MA of 107.82, and above the 200-day MA of 113.91, indicating a bullish trend. The MACD of 3.99 indicates Negative momentum. The RSI at 70.89 is Negative, neither overbought nor oversold. The STOCH value of 86.35 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for EMR.
Emerson Electric Company Risk Analysis
Emerson Electric Company disclosed 17 risk factors in its most recent earnings report. Emerson Electric Company reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Emerson Electric Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $128.77B | 33.22 | 20.84% | 1.17% | 7.00% | 16.84% | |
78 Outperform | $73.64B | 22.12 | 107.62% | 2.35% | -1.85% | 12.04% | |
78 Outperform | $62.67B | 42.04 | 8.09% | 0.54% | 13.34% | 1.98% | |
76 Outperform | $86.94B | 26.19 | 27.16% | 0.96% | -0.23% | 22.41% | |
73 Outperform | $67.84B | 28.79 | 9.82% | 1.75% | 6.49% | 24.14% | |
68 Neutral | $34.84B | 38.91 | 25.86% | 1.66% | -11.19% | -22.50% | |
64 Neutral | $4.43B | 12.01 | 5.16% | 249.23% | 4.03% | -11.73% |
* Industrials Sector Average
Performance Comparison
EMR
Emerson Electric Company
120.61
8.91
7.98%
ETN
Eaton
329.07
0.22
0.07%
ITW
Illinois Tool Works
251.34
6.60
2.70%
PH
Parker Hannifin
680.40
138.02
25.45%
ROK
Rockwell Automation
309.05
41.57
15.54%
ROP
Roper Technologies
582.88
39.65
7.30%
Emerson Electric Company Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q2-2025)
| % Change Since: 12.93%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
Emerson demonstrated strong performance in the second quarter with record profitability and positive growth in key markets like Process and Hybrid. However, challenges remain in China and factory automation, along with the impact of tariffs. Despite these challenges, Emerson's positive outlook for the second half and strong cash flow contribute to a balanced overall sentiment.Q2-2025 Updates
Positive Updates
Strong Second Quarter Performance
Emerson delivered a strong second quarter with underlying orders growth of 4%, exceeding expectations. All regions, including China, showed positive performance. Adjusted earnings per share exceeded guidance by $0.06.
Record Profitability
Gross profit margin of 53.5% improved by 130 basis points year-over-year. Adjusted segment EBITDA margin reached 28%, a 200 basis point improvement from the previous year.
Growth in Process and Hybrid Markets
Process and Hybrid businesses reported sales growth of mid-single digits, driven by significant capital investments in energy and LNG projects.
AspenTech Acquisition and Integration
AspenTech acquisition completed, expected to be modestly accretive to adjusted EPS in 2025. Targeting $100 million of cost synergies by 2028.
Positive Outlook for Second Half
Emerson is guiding for an underlying sales growth of approximately 4% for the full year, with expectations for accelerating growth in the second half.
Strong Free Cash Flow
Emerson generated strong free cash flow of $738 million, a margin of 17%, up 14% year-over-year.
Negative Updates
Challenges in China and Factory Automation
Continued weakness in China, specifically bulk chemical, and muted expectations for factory automation recovery.
Tariff Impact and Mitigation
Gross incremental tariff impact on US imports expected to be $185 million in 2025. Total gross impact in 2025 expected to be $245 million.
Discrete Business Challenges
Discrete businesses were still down approximately 1% year-over-year, with pronounced weakness in Europe and China.
Company Guidance
During the Emerson Second Quarter 2025 Earnings Conference Call, Emerson's President and CEO, Lal Karsanbhai, provided detailed guidance reflecting confidence in the company's performance and future outlook. Emerson reported a strong second quarter with underlying orders growth of 4%, led by a 6% increase in Process and Hybrid businesses and an 8% rise in Test and Measurement. Underlying sales came in at the top of the guide with record margin performance, and adjusted earnings per share exceeded guidance by $0.06. Emerson projected 4% underlying sales growth for the year and raised the midpoint of its adjusted EPS guide to between $5.90 and $6.05 per share. The company expects to generate $3.1 billion to $3.2 billion in free cash flow and plans to return $2.3 billion to shareholders through dividends and share repurchases. Additionally, Emerson completed the acquisition of AspenTech, expecting it to be modestly accretive to adjusted EPS in 2025, while targeting $100 million of cost synergies by 2028. The company also anticipates a significant second-half recovery in discrete sales, driven by its strong global footprint and effective tariff mitigation strategies, with a gross exposure of $245 million in 2025 expected to be fully offset.Emerson Electric Company Corporate Events
Business Operations and StrategyFinancial Disclosures
Emerson Electric Reports Strong Financial Performance in 2024
Positive
Nov 5, 2024
Emerson reported strong financial performance for fiscal year 2024, with a 15% increase in net sales to $17.5 billion and a rise in adjusted earnings per share by 24% to $5.49. The company highlights its strategic transformation towards becoming a leader in industrial technology by integrating Test & Measurement, realizing significant synergies, and maintaining a focus on automation solutions. Emerson’s solid results and future strategic actions aim to deliver continued growth and value for shareholders in 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.