Emerson Electric Company (EMR) AI Stock Analysis

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Emerson Electric Company

(NYSE:EMR)

Rating:73Outperform

Price Target:

$135.00

▲(9.30%Upside)

Emerson Electric's overall score reflects strong financial performance, robust earnings results, and positive technical indicators. While the stock's valuation is somewhat high, the company's strong cash flow and positive market outlook, particularly in Process and Hybrid businesses, help mitigate valuation concerns. Continued monitoring of debt levels and potential market corrections due to overbought conditions is advised.

Positive Factors

Financial performance

A higher valuation multiple is warranted due to better-than-expected growth and EPS resilience.

Innovation

The introduction of the new Grid Controller enhances high-speed data capture for electrical substations, demonstrating continued innovation.

Technology leadership

The company's transformation into an industrial automation 'pure play' positions it as a leader in technology.

Negative Factors

Guidance concerns

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

Guidance for a high single-digit fourth quarter exit rate screens for downside compared to past performance and unchanged low single-digit order trends.

Tariff impact

Tariffs are a $245mn headwind to FY25, or 2.5% of revenue on an annualized basis.

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

Market Cap

$68.91B

Dividend Yield1.72%

Average Volume (3M)2.89M

Price to Earnings (P/E)29.2

Beta (1Y)1.19

Revenue Growth6.49%

EPS Growth24.14%

CountryUS

Employees73,000

SectorIndustrials

Sector Strength92

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)1.48

Shares Outstanding562,500,000

10 Day Avg. Volume2,547,675

30 Day Avg. Volume2,894,695

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

$135.75

Price Target Upside9.91% 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 across its two main business segments: Automation Solutions and Commercial & Residential Solutions. In the Automation Solutions segment, Emerson provides technologies and services that help industries optimize their operations, including process control systems, measurement instrumentation, and digital transformation solutions. This segment serves industries such as oil and gas, chemical, and industrial manufacturing. The Commercial & Residential Solutions segment offers products and services that enhance comfort and energy efficiency in homes and businesses, including HVAC systems, refrigeration technologies, and tools. Emerson's revenue model is supported by a combination of direct sales to end-users, sales through distributors, and long-term service agreements. The company also benefits from strategic partnerships and acquisitions that expand its technological capabilities and market reach.

Emerson Electric Company Key Performance Indicators (KPIs)

Any

EBT Margin by Segment

EBT Margin by Segment
Measures the profitability margin before taxes for each segment, providing insight into which areas are most financially efficient.

Chart InsightsEmerson's Intelligent Devices segment shows a steady upward trend in EBT margin, reflecting operational efficiencies and strategic focus. Meanwhile, the Software and Control segment has experienced volatility but is recovering, likely benefiting from the AspenTech acquisition. The earnings call highlights strong overall performance with record profitability and a positive outlook for the second half of the year, despite challenges in China and factory automation. Emerson's strategic investments and tariff mitigation strategies are expected to support continued margin improvement and shareholder returns.

Data provided by:

Main Street Data

Emerson Electric Company Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q2-2025)

% Change Since: 15.65%|

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 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

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	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

Technical Analysis Sentiment

Positive

Last Price123.51

Price Trends

50DMA

109.88

Positive

100DMA

115.14

Positive

200DMA

115.00

Positive

Market Momentum

MACD

3.21

Negative

RSI

68.78

Neutral

STOCH

88.72

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 123.51 is above the 20-day moving average (MA) of 119.47, above the 50-day MA of 109.88, and above the 200-day MA of 115.00, indicating a bullish trend. The MACD of 3.21 indicates Negative momentum. The RSI at 68.78 is Neutral, neither overbought nor oversold. The STOCH value of 88.72 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 1 New Risks

Our Portfolio Actions Including the Proposed Acquisition of the Remaining Interest in AspenTech Not Already Owned by the Company and the Process to Explore Strategic Alternatives for the Company's Safety & Productivity Segment May Not Be Completed or Completed on the Terms and Conditions Contemplated, or With the Expected Benefits Q3, 2024

Emerson Electric Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ETN	80 Outperform	$129.70B	33.46	20.84%	1.16%	7.00%	16.84%
ROP	80 Outperform	$61.23B	41.08	8.09%	0.55%	13.34%	1.98%
ITW	79 Outperform	$72.54B	21.79	107.62%	2.38%	-1.85%	12.04%
PH	76 Outperform	$84.59B	25.48	27.16%	1.00%	-0.23%	22.41%
EMR	73 Outperform	$68.91B	29.24	9.82%	1.72%	6.49%	24.14%
ROK	68 Neutral	$36.13B	40.35	25.86%	1.60%	-11.19%	-22.50%
Sector *	66 Neutral	$4.50B	12.28	5.32%	248.52%	4.13%	-12.36%

* Industrials Sector Average

Performance Comparison

EMR

Emerson Electric Company

123.51

16.69

15.62%

ETN

Eaton

331.45

12.74

4.00%

ITW

Illinois Tool Works

247.56

13.78

5.89%

Parker Hannifin

671.26

150.65

28.94%

ROK

Rockwell Automation

324.33

73.69

29.40%

ROP

Roper Technologies

572.87

19.57

3.54%

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.