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Emerson Electric Company (EMR)
NYSE:EMR
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Emerson Electric Company
(NYSE:EMR)
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Rating:69Neutral
Price Target:
$167.00
â–²(10.78% Upside)
Action:DowngradedDate:02/04/26
EMR scores well on trend/momentum and a constructive earnings outlook (raised EPS guidance, strong orders/backlog, and committed shareholder returns). The overall score is held back by softer recent cash-flow trajectory and increased leverage, and by a demanding valuation (high P/E with a modest dividend yield).
Positive Factors
Margin Strength
Sustained high gross (~53%) and net (~13%) margins, complemented by recently strong adjusted segment EBITDA, indicate durable operational leverage across Automation and Commercial businesses. Healthy margins support reinvestment, R&D, and consistent cash generation through cycles.
Order Momentum & Backlog
Consecutive quarters of order growth and a $7.9B backlog (book-to-bill 1.13) provide multi-quarter revenue visibility. A robust project funnel helps smooth execution, supports predictable margin absorption on large projects, and reduces near-term revenue downside risk.
Recurring Software Revenue & Wins
Growing software ACV (recurring revenue) and notable product/system wins deepen higher-margin, sticky revenue streams. Sustained ACV growth improves revenue predictability, raises lifetime customer value, and strengthens Emerson's differentiation in industrial automation over the medium term.
Negative Factors
Rising Leverage
A substantial jump in debt reduces financial flexibility and increases interest and refinancing risk. Higher leverage can constrain M&A optionality, limit capital return capacity during downturns, and amplify sensitivity to slower cash flow or rising rates over the next several quarters.
Softening Free Cash Flow
Although FCF historically covered much of net income, recent negative FCF growth and weaker operating cash trends reduce internal funding for capex, share repurchases, and dividends. Continued softness would pressure liquidity and strategic flexibility over the medium term.
Software Renewal Accounting Headwind
An accounting-driven software renewal timing effect is depressing reported revenue, margins and EPS through H1/FY. This distorts near-term comparability, complicates performance assessment and may delay visible organic growth despite underlying demand, risking stakeholder confidence.
Emerson Electric Company (EMR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$84.77B
Dividend Yield1.58%
Average Volume (3M)3.70M
Price to Earnings (P/E)36.8
Beta (1Y)1.32
Revenue Growth2.97%
EPS Growth18.14%
CountryUS
Employees73,000
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)1.46
Shares Outstanding562,302,060
10 Day Avg. Volume2,935,324
30 Day Avg. Volume3,698,769
Financial Highlights & Ratios
PEG Ratio1.82
Price to Book (P/B)3.67
Price to Sales (P/S)4.13
P/FCF Ratio27.87
Enterprise Value/Market Cap1.14
Enterprise Value/Revenue5.33
Enterprise Value/Gross Profit10.32
Enterprise Value/Ebitda19.43
Forecast
1Y Price Target
$164.19Price Target Upside8.92% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
EPS Forecast (FY)6.52
Revenue Forecast (FY)$18.95B
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 multiple streams primarily from the sale of products and services in its two main business segments. The Automation Solutions segment earns money by providing advanced technologies for process automation, including control systems, software, and related services, which are essential for industries aiming to enhance operational efficiency and reliability. The segment also benefits from recurring revenue through service agreements and long-term contracts. In the Commercial & Residential Solutions segment, the company earns income from HVAC systems, tools, and appliances, which are sold directly to consumers and businesses. Additionally, Emerson has established significant partnerships with other companies and industries, allowing it to expand its market reach and enhance its product offerings, all of which contribute to its overall revenue growth and sustainability.
Emerson Electric Company Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyEmerson Electric Company Earnings Call Summary
Earnings Call Date:Feb 03, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call conveyed a largely constructive tone: strong order growth (9%), backlog expansion, prominent wins (Ovation, AI data center, Sempra LNG), solid profitability (27.7% adjusted segment EBITDA margin) and raised EPS guidance support a positive operational narrative. Offsetting risks include an accounting-driven software renewal headwind that dents near-term revenue and margins, regional softness in China and parts of Europe, and margin pressure in certain groups. On balance, the positives (broad order momentum, large project wins, margin outperformance, and improved EPS guidance) meaningfully outweigh the lowlights, though near-term execution and regional demand will be important to monitor.Q1-2026 Updates
Positive Updates
Order Momentum and Backlog Growth
Underlying orders grew 9% year-over-year (fourth consecutive quarter of strong order growth); twelve-month orders up 6%; backlog ended the quarter at $7.9 billion, up 9% YoY; book-to-bill was 1.13 and the project funnel is $11.1 billion.
Strong Performance in Key Growth Areas
Software & Systems orders up 23% YoY and Test & Measurement orders up 20% YoY; Ovation orders up 74% (large project wins, including behind-the-meter data centers); Test & Measurement sales up 11% YoY; growth verticals collectively up 14% with Power up 17%.
Revenue and Sales Start of Year
Underlying sales were up 2% YoY in Q1 (including a roughly 1-point drag from a software contract renewal dynamic); Americas up 3% with U.S. up 6%; Middle East & Africa up 9%; India up 22%.
Profitability and EPS Performance
Adjusted segment EBITDA margin came in at 27.7% (above expectations); adjusted EPS was $1.46, a 6% increase YoY; operations excluding software renewal drag delivered $0.10 of incremental EPS in Q1.
Raised EPS Guidance and Reiterated Targets
Raised bottom and midpoint of full-year adjusted EPS guidance to $6.40–$6.55; reiterated full-year targets including ~5.5% sales growth, ~4% underlying sales growth, and adjusted segment EBITDA margin of ~28%; reiterated long-term 2028 targets (e.g., $21B revenue, 30% adjusted segment EBITDA margin).
Cash Return and Share Repurchase Activity
Completed $250 million of share repurchases in Q1; committed to return approximately $2.2 billion to shareholders in 2026 (about $1.2 billion dividends and $1.0 billion repurchases); long-term plan to return $10 billion (70% of cumulative cash) through $6B repurchases and $4B dividends.
Software Annual Contract Value (ACV) and Product Wins
ACV grew 9% YoY to $1.6 billion; company expects ACV growth of 10%+ in 2026. Product and technology wins include Nigel.ai recognition, DeltaV version 16 release, IoT Company of the Year award, strategic collaboration with Roche, and selection on major projects (1.7 GW AI data center automation, Sempra Port Arthur LNG Phase 2, space/satellite test wins).
Cash Flow and Free Cash Flow Outlook
Q1 free cash flow was $202 million with a 14% margin, slightly above expectations; company expects full-year free cash flow growth of ~10% at greater than 18% margin.
Negative Updates
Software Contract Renewal Accounting Drag
A software contract renewal dynamic negatively impacted results: reduced Q1 year-over-year sales growth by ~1 percentage point, adjusted segment EBITDA margin by ~70 basis points, and EPS by ~$0.06; additional headwinds expected in H1 (GAAP revenue headwind ~$110M in H1, ~$120M full year) and Q2 margin dilution (~150 bps vs Q2 2025) with ~ $65M headwind in Q2.
Regional Softness — China and Europe
China remained soft (orders down high single digits in the quarter) and management expects China to be down low single digits for the year; Europe overall pace subdued despite some project timing benefits (Europe only up modestly).
Segment Margin Pressures
Intelligent Devices margin decreased 70 basis points YoY to 26.9% driven by mix and FX headwinds; Safety & Productivity margin declined 40 basis points YoY to 20.9% due to lower volumes; Sensors experienced ~200 basis points of margin decline YoY due to FX and mix dynamics.
Slower Near-Term Sales Despite Orders
Q1 underlying sales growth was modest at 2% YoY despite strong orders, reflecting timing and the software renewal accounting dynamic; Intelligent Devices expected to be softer through Q2 with recovery pushed to the back half.
Weakness in Specific Verticals
Transportation, chemicals (especially in Europe), and automotive remained challenged; chemicals in Europe and China are notable headwinds and contributed to a more bearish view on China for the year.
Supply Chain and Component Risks — DRAM Exposure
Company noted DRAM supply constraints and extended lead times; total DRAM exposure modest (~$8M purchases, sensors < $1M exposure) and manageable, but availability (not price) is a risk being monitored.
Tariff Uncertainties
Company had approximately $130 million of tariffs built into its plan; recent tariff developments could provide relief (net positive) but impact remains early to quantify.
Company Guidance
Emerson reiterated full‑year 2026 guidance for 5.5% sales growth (4% underlying), an adjusted segment EBITDA margin of ~28% and raised adjusted EPS to $6.40–$6.55, while reaffirming plans to return ≈$2.2B to shareholders in 2026 ($1.2B dividends, $1.0B buybacks; $250M repurchased in Q1) and expecting ACV growth >10%; Q2 guidance is sales +3–4% (underlying +1–2%), adjusted segment EBITDA ≈27% and adjusted EPS $1.50–$1.55. Management said excluding a software contract‑renewal accounting dynamic growth would be ~3–4% in Q2 and ~5% for the year (the renewal dynamic reduced Q1 growth by ~1 percentage point, Q1 EBITDA by ~70 bps and Q1 EPS by ~$0.06, will hit Q2 EPS by ~$0.09 and Q2 EBITDA ~150 bps vs. prior year, and reduces full‑year EPS by ~$0.05 and margin by ~40 bps). They expect operations to deliver roughly $0.50 of incremental full‑year EPS, ~80 bps of margin expansion from price/cost and synergies, second‑half growth of ~6%, backlog of $7.9B (book‑to‑bill 1.13), and reiterated longer‑term 2028 targets of $21B revenue, 30% adjusted segment EBITDA margin, $8 adjusted EPS, 20% FCF margin and $10B returned to shareholders ($6B buybacks, $4B dividends).Emerson Electric Company Financial Statement Overview
Summary
Profitable profile with strong gross margin (~53%) and solid net margin (~13%), plus decent cash conversion (FCF to net income ~0.86). Offsetting this, total debt has risen materially versus 2024 and free cash flow has softened recently; 2023 one-time volatility also reduces clarity on multi-year consistency.Income Statement
EMR shows solid profitability with gross margin ~53% and net margin ~13% in TTM (Trailing-Twelve-Months), broadly consistent with the latest annual period. Revenue growth is modest in the most recent annual report (~3%), while margins have improved versus 2024 (higher gross and operating margins). A key watch-out is the large volatility in 2023 net income/margins versus other years, suggesting results were impacted by a major non-recurring item and making multi-year comparability less clean.74
Positive
Balance Sheet
Leverage is moderate with debt-to-equity around ~0.68 in both TTM (Trailing-Twelve-Months) and the latest annual report, and equity is sizable (~$20B) against total assets (~$42B). However, total debt has increased materially versus 2024 (from ~$8.4B to ~$13.8B), reducing balance-sheet flexibility. Returns on equity are steady around ~11% in the most recent periods, but the 2023 return level was unusually high, again pointing to non-recurring impacts that complicate trend assessment.66
Positive
Cash Flow
Cash generation is generally healthy with free cash flow covering most of net income (free cash flow to net income ~0.86 in both TTM (Trailing-Twelve-Months) and the latest annual period). That said, free cash flow growth is negative recently (slightly down in the latest annual period and more negative in TTM), and operating cash flow is not strongly tracking earnings based on the provided cash coverage measure (notably lower in recent periods versus 2024). Overall, cash flow quality is acceptable but has softened versus the prior year.62
Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 18.18B | 18.02B | 17.49B | 15.16B | 13.80B | 12.93B |
| Gross Profit | 9.39B | 9.52B | 8.88B | 7.43B | 6.31B | 5.73B |
| EBITDA | 4.99B | 4.86B | 4.03B | 4.21B | 3.50B | 2.69B |
| Net Income | 2.31B | 2.29B | 1.97B | 13.22B | 3.23B | 2.30B |
Balance Sheet | ||||||
| Total Assets | 41.94B | 41.96B | 44.25B | 42.75B | 35.67B | 24.71B |
| Cash, Cash Equivalents and Short-Term Investments | 1.75B | 1.54B | 3.59B | 8.05B | 1.80B | 2.35B |
| Total Debt | 13.92B | 13.76B | 8.36B | 8.56B | 10.69B | 7.08B |
| Total Liabilities | 21.65B | 21.67B | 16.74B | 16.15B | 19.36B | 14.79B |
| Stockholders Equity | 20.29B | 20.28B | 21.64B | 20.69B | 10.36B | 9.88B |
Cash Flow | ||||||
| Free Cash Flow | 2.58B | 2.67B | 2.91B | 274.00M | 2.39B | 2.99B |
| Operating Cash Flow | 3.02B | 3.10B | 3.33B | 637.00M | 2.92B | 3.58B |
| Investing Cash Flow | -649.00M | -593.00M | -5.36B | 12.41B | -5.33B | -2.12B |
| Financing Cash Flow | -3.51B | -4.51B | -2.46B | -6.82B | 2.05B | -2.42B |
Emerson Electric Company Technical Analysis
Positive
150.75
Price Trends
145.31
Positive
138.39
Positive
134.57
Positive
Market Momentum
1.02
Positive
51.92
Neutral
65.86
Neutral
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 150.75 is below the 20-day moving average (MA) of 151.26, above the 50-day MA of 145.31, and above the 200-day MA of 134.57, indicating a neutral trend. The MACD of 1.02 indicates Positive momentum. The RSI at 51.92 is Neutral, neither overbought nor oversold. The STOCH value of 65.86 is Neutral, 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $145.82B | 35.97 | 21.57% | 1.29% | 8.24% | 6.21% | |
80 Outperform | $127.38B | 36.81 | 25.79% | 0.79% | 0.22% | 26.66% | |
72 Outperform | $83.76B | 27.71 | 93.75% | 2.43% | -0.41% | -10.88% | |
69 Neutral | $84.77B | 36.82 | 11.31% | 1.58% | 2.97% | 18.14% | |
68 Neutral | $45.78B | 46.62 | 27.71% | 1.33% | 0.98% | -7.51% | |
67 Neutral | $80.67B | 28.48 | 25.14% | 1.48% | -1.78% | 27.35% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
EMR
Emerson Electric Company
150.75
35.50
30.80%
CMI
Cummins
583.87
234.40
67.07%
ETN
Eaton
375.92
100.99
36.73%
ITW
Illinois Tool Works
290.63
33.17
12.88%
PH
Parker Hannifin
1,009.18
364.58
56.56%
ROK
Rockwell Automation
407.45
133.03
48.48%
Emerson Electric Company Corporate Events
Executive/Board Changes
Emerson Electric Approves Special Performance Awards for Executives
Positive
Nov 14, 2025
On November 13, 2025, Emerson Electric’s Compensation Committee approved a Special Performance-based Award for CEO Lal Karsanbhai and COO Ram Krishnan, recognizing their leadership in the company’s automation transformation. The awards, consisting of long-term stock options with exercise prices set at significant premiums, aim to align the executives’ interests with shareholders, ensuring leadership continuity and supporting Emerson’s pay-for-performance philosophy.
The most recent analyst rating on (EMR) stock is a Buy with a $144.00 price target. To see the full list of analyst forecasts on Emerson Electric Company stock, see the EMR Stock Forecast page.
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Emerson Electric Announces Major Share Repurchase Plan
Positive
Nov 5, 2025
On November 5, 2025, Emerson Electric Co. announced its Board of Directors authorized the repurchase of up to 50 million shares of its common stock, supplementing a previous authorization from March 2020. This move is part of Emerson’s strategy to return cash to shareholders, alongside a 5% increase in its quarterly cash dividend. The company reported strong financial results for the fourth quarter and full fiscal year 2025, with significant margin expansion and robust cash generation. Emerson’s performance was bolstered by the successful integration of AspenTech and Test & Measurement, achieving $200 million in cost synergies. The company remains optimistic about sustainable growth driven by long-term secular trends and plans to return approximately $2.2 billion to shareholders in 2026 through share repurchases and dividends.
The most recent analyst rating on (EMR) stock is a Buy with a $149.00 price target. To see the full list of analyst forecasts on Emerson Electric Company stock, see the EMR Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.