Emerson Electric Company (EMR) AI Stock Analysis

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Emerson Electric Company

(NYSE:EMR)

72Outperform

Emerson Electric Company exhibits strong financial fundamentals and impressive earnings call highlights, underscoring its operational improvements and strategic initiatives. However, technical analysis indicates bearish momentum, and valuation metrics suggest the stock may be overvalued. The company's strengths in cash flow and profitability provide a buffer against market headwinds, resulting in a moderately positive overall stock score.

Positive Factors

Market Position

Emerson is a likely beneficiary of US power generation additions, given its leading market position.

Operational Execution

Favorable position in markets with still positive underlying long-term fundamentals coupled with a strong track record of operational execution that should drive outsized financial returns over time.

Portfolio Transformation

Emerson's portfolio transformation has repositioned the business portfolio to better capture growth from secular mega-trends in automation, software, and energy.

Negative Factors

Deal Economics

The raised price weighs on deal economics & ability to remain EPS neutral.

Order Growth

Underlying orders growth decelerated to +1% y/y from +2% last quarter, raising investor concerns.

Potential EPS Impact

A divesture of the Safety & Productivity segment would likely be EPS dilutive.

Emerson Electric Company (EMR) vs. S&P 500 (SPY)

Market Cap

$53.33B

Dividend Yield2.23%

Average Volume (3M)3.28M

Price to Earnings (P/E)22.5

Beta (1Y)1.20

Revenue Growth10.29%

EPS Growth22.72%

CountryUS

Employees73,000

SectorIndustrials

Sector Strength63

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)4.20

Shares Outstanding563,900,000

10 Day Avg. Volume2,967,533

30 Day Avg. Volume3,282,729

Financial Highlights & Ratios

PEG Ratio0.99

Price to Book (P/B)N/A

Price to Sales (P/S)3.63

Price to Cash Flow (P/CF)20.50

P/FCF Ratio23.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$139.69

Price Target Upside47.71% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering17

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 strong financial stability, with robust cash flow generation and prudent debt management. Despite facing operational challenges impacting EBIT, the company's profitability and cash position provide a solid foundation for future growth.

Income Statement

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Very Positive

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.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
17.55B	17.49B	15.16B	19.63B	18.24B	16.79B
	Gross Profit
5.66B	7.81B	7.43B	8.19B	7.56B	7.01B
	EBIT
-109.00M	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	7.69B	8.16B	10.37B	6.67B	7.49B
	Net Debt
4.79B	4.10B	106.00M	8.57B	4.31B	4.17B
	Total Liabilities
16.23B	16.74B	16.15B	19.36B	14.79B	14.44B
	Stockholders Equity
26.38B	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

Technical Analysis Sentiment

Negative

Last Price94.57

Price Trends

50DMA

118.39

Negative

100DMA

122.57

Negative

200DMA

115.08

Negative

Market Momentum

MACD

-2.40

Negative

RSI

38.78

Neutral

STOCH

24.92

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EMR, the sentiment is Negative. The current price of 94.57 is below the 20-day moving average (MA) of 110.49, below the 50-day MA of 118.39, and below the 200-day MA of 115.08, indicating a bearish trend. The MACD of -2.40 indicates Negative momentum. The RSI at 38.78 is Neutral, neither overbought nor oversold. The STOCH value of 24.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ROP	78 Outperform	$58.18B	37.77	8.53%	0.57%	13.94%	13.02%
ETN	74 Outperform	$96.58B	25.95	20.23%	1.57%	7.25%	18.36%
ITW	74 Outperform	$66.17B	19.26	110.24%	2.62%	-1.30%	20.26%
PH	74 Outperform	$66.60B	21.40	25.87%	1.26%	0.41%	19.76%
EMR	72 Outperform	$53.33B	22.49	9.66%	2.23%	10.29%	22.72%
ROK	69 Neutral	$25.68B	28.26	26.22%	2.25%	-11.28%	-23.69%
Sector *	62 Neutral	$7.25B	12.39	3.08%	3.39%	3.63%	-14.32%

* Industrials Sector Average

Performance Comparison

EMR

Emerson Electric Company

94.57

-18.06

-16.03%

ETN

Eaton

246.52

-75.15

-23.36%

ITW

Illinois Tool Works

225.57

-30.35

-11.86%

Parker Hannifin

517.23

-42.83

-7.65%

ROK

Rockwell Automation

227.11

-49.76

-17.97%

ROP

Roper Technologies

541.80

1.69

0.31%

Emerson Electric Company Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: -25.62% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance with record profit margins and free cash flow, alongside successful portfolio transformation and innovation recognition. However, discrete orders and demand in China posed challenges, alongside FX headwinds.

Highlights

Record Profit Margins

Gross profit margin reached a record 53.5%, with adjusted segment EBITDA margins of 28%, a 340 basis point improvement due to strong operational performance and cost management.

Strong Free Cash Flow

Free cash flow for Q1 2025 was $694 million, up 89% versus Q1 2024, with a margin of approximately 17%.

Successful Portfolio Transformation

Emerson reached an agreement to acquire outstanding shares of AspenTech, furthering its portfolio transformation.

Recognition for Innovation

Emerson's DeltaV Edge Environment won the 2024 Processing Breakthrough Product award and the 2025 IoT Breakthrough Award for industrial IoT innovation.

Strong Segment Performance

Software and control grew 4% while intelligent devices grew 2%, supported by strong performance in energy transition and life sciences segments.

Lowlights

Discrete Orders Softness

Discrete businesses, including safety and productivity, were down approximately 4%, with continued softness in automotive and factory automation sectors.

Muted Demand in China

Demand in China remained muted, with strength in power offset by weakness in chemical and discrete end markets.

Foreign Exchange Headwinds

FX movements unfavorably impacted adjusted EPS by approximately $0.08, prompting a lower GAAP net sales guidance.

Company Guidance

During the Emerson First Quarter 2025 Earnings Conference Call, the company reiterated its guidance for underlying sales, adjusted earnings per share (EPS), and free cash flow for the year. Emerson reported a 2% increase in underlying sales, driven by a 5% growth in process and hybrid businesses, while discrete businesses experienced a 4% decline. The company achieved record gross profit margins of 53.5% and adjusted segment EBITDA margins of 28%, a 340 basis point improvement. Adjusted EPS grew by 13% to $1.38, and free cash flow was $694 million, up 89% from the previous year. Emerson raised its expectations for operating leverage to the 70s from the mid-40s, driven by strong operational performance and adjusted for foreign exchange fluctuations. The company also highlighted a significant project funnel of $11.5 billion, with substantial opportunities in LNG and power markets.

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.