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Emerson (EMR) Q2 Earnings & Revenues Top Estimates, Up Y/Y
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Emerson Electric Co. (EMR - Free Report) has reported better-than-expected second-quarter fiscal 2022 (ended Mar 31, 2022) results, with earnings and sales surpassing estimates by 9.3% and 1.7%, respectively.
The company’s adjusted earnings came in at $1.29 per share, beating the Zacks Consensus Estimate of $1.18. On a year-over-year basis, the bottom line improved 21%.
Inside the Headlines
Emerson’s net sales were $4,791 million in the quarter, reflecting an increase of 8% from the year-ago quarter. Underlying sales were up 10%. The top line beat the Zacks Consensus Estimate of $4,711 million.
The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal second-quarter segmental results are briefly discussed below:
Automation Solutions’ net sales were $2,937 million, increasing 5.2% year over year. Underlying sales of the segment increased 7%. Commercial & Residential Solutions generated net sales of $1,857 million in the fiscal second quarter, up 12.9% year over year. Underlying sales were up 14%. Under the segment, Climate Technologies’ sales increased 15.6% to $1,341 million and that from Tools & Home Products jumped 6.4% to $516 million.
Emerson Electric Co. Price, Consensus and EPS Surprise
In the quarter under review, Emerson's cost of sales increased 10.5% year over year to $2,839 million. It represented 59.3% of net sales compared with 58% in the year-ago quarter. Pretax margin in the quarter was 16.9%, up 30 basis points (bps). Adjusted EBITA margin came in at 20.2%, up 20 bps. Selling, general and administrative (SG&A) expenses decreased 0.5% to $1,049 million. As a percentage of sales, SG&A expenses were 21.9% compared with 23.8% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting second-quarter fiscal 2022, Emerson had cash and cash equivalents of $6,929 million, up from $4,726 million in the previous quarter. The long-term debt balance decreased 6% sequentially to $8,203 million. During the first six months of fiscal 2022, the company repaid debts of $504 million.
In the first six months of fiscal 2022, it generated net cash of $965 million from operating activities, reflecting a decrease of 40.2% from the year-ago period. Capital expenditure was $225 million, down from $222 million.
During the first six months of fiscal 2022, the company paid out dividends of $613 million and repurchased shares worth $285 million.
Outlook
For fiscal 2022 (ending September 2022), it anticipates net sales growth of 8-10%, higher than 6-8% increase predicted earlier. Underlying sales are expected to grow in the range of 9-11% compared with 7-9% growth projected earlier.
For fiscal 2022, adjusted earnings per share are predicted to lie in the range of $4.95-$5.10 compared with $4.90-$5.05 estimated previously.
For the fiscal year, Emerson expects Automation Solutions’ net sales to grow in the range of 6-8% while Commercial & Residential Solutions’ net sales are projected to increase 11-13%.
The company anticipates generating an operating cash flow of $3.6 billion, with a free cash flow of $3 billion. It expects to repurchase $250-$500 million worth of shares and pay dividends totaling $1.2 billion in fiscal 2022.
For the third quarter of fiscal 2022 (ending June 2022), it anticipates net sales growth of 7-9%. Underlying sales are expected to grow in the range of 9-11%.
For the fiscal third quarter, adjusted earnings per share are expected to lie in the range of $1.25-$1.30.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
AZZ’s earnings estimates increased 12.6% for fiscal 2022 (ending February 2022) in the past 60 days. Its shares have lost 2.8% in the past three months.
Graphic Packaging Holding Company (GPK - Free Report) presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 7.2%, on average.
In the past 60 days, GPK’s earnings estimates have increased 7.6% for 2022. The stock has rallied 19.6% in the past three months.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.
Earnings estimates of Ferguson have increased 6.5% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 17.8% in the past three months.
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Emerson (EMR) Q2 Earnings & Revenues Top Estimates, Up Y/Y
Emerson Electric Co. (EMR - Free Report) has reported better-than-expected second-quarter fiscal 2022 (ended Mar 31, 2022) results, with earnings and sales surpassing estimates by 9.3% and 1.7%, respectively.
The company’s adjusted earnings came in at $1.29 per share, beating the Zacks Consensus Estimate of $1.18. On a year-over-year basis, the bottom line improved 21%.
Inside the Headlines
Emerson’s net sales were $4,791 million in the quarter, reflecting an increase of 8% from the year-ago quarter. Underlying sales were up 10%. The top line beat the Zacks Consensus Estimate of $4,711 million.
The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal second-quarter segmental results are briefly discussed below:
Automation Solutions’ net sales were $2,937 million, increasing 5.2% year over year. Underlying sales of the segment increased 7%. Commercial & Residential Solutions generated net sales of $1,857 million in the fiscal second quarter, up 12.9% year over year. Underlying sales were up 14%. Under the segment, Climate Technologies’ sales increased 15.6% to $1,341 million and that from Tools & Home Products jumped 6.4% to $516 million.
Emerson Electric Co. Price, Consensus and EPS Surprise
Emerson Electric Co. price-consensus-eps-surprise-chart | Emerson Electric Co. Quote
Margin Details
In the quarter under review, Emerson's cost of sales increased 10.5% year over year to $2,839 million. It represented 59.3% of net sales compared with 58% in the year-ago quarter. Pretax margin in the quarter was 16.9%, up 30 basis points (bps). Adjusted EBITA margin came in at 20.2%, up 20 bps. Selling, general and administrative (SG&A) expenses decreased 0.5% to $1,049 million. As a percentage of sales, SG&A expenses were 21.9% compared with 23.8% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting second-quarter fiscal 2022, Emerson had cash and cash equivalents of $6,929 million, up from $4,726 million in the previous quarter. The long-term debt balance decreased 6% sequentially to $8,203 million. During the first six months of fiscal 2022, the company repaid debts of $504 million.
In the first six months of fiscal 2022, it generated net cash of $965 million from operating activities, reflecting a decrease of 40.2% from the year-ago period. Capital expenditure was $225 million, down from $222 million.
During the first six months of fiscal 2022, the company paid out dividends of $613 million and repurchased shares worth $285 million.
Outlook
For fiscal 2022 (ending September 2022), it anticipates net sales growth of 8-10%, higher than 6-8% increase predicted earlier. Underlying sales are expected to grow in the range of 9-11% compared with 7-9% growth projected earlier.
For fiscal 2022, adjusted earnings per share are predicted to lie in the range of $4.95-$5.10 compared with $4.90-$5.05 estimated previously.
For the fiscal year, Emerson expects Automation Solutions’ net sales to grow in the range of 6-8% while Commercial & Residential Solutions’ net sales are projected to increase 11-13%.
The company anticipates generating an operating cash flow of $3.6 billion, with a free cash flow of $3 billion. It expects to repurchase $250-$500 million worth of shares and pay dividends totaling $1.2 billion in fiscal 2022.
For the third quarter of fiscal 2022 (ending June 2022), it anticipates net sales growth of 7-9%. Underlying sales are expected to grow in the range of 9-11%.
For the fiscal third quarter, adjusted earnings per share are expected to lie in the range of $1.25-$1.30.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies are discussed below.
AZZ Inc. (AZZ - Free Report) presently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Its earnings surprise for the last four quarters was 22.3%, on average.
AZZ’s earnings estimates increased 12.6% for fiscal 2022 (ending February 2022) in the past 60 days. Its shares have lost 2.8% in the past three months.
Graphic Packaging Holding Company (GPK - Free Report) presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 7.2%, on average.
In the past 60 days, GPK’s earnings estimates have increased 7.6% for 2022. The stock has rallied 19.6% in the past three months.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.
Earnings estimates of Ferguson have increased 6.5% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 17.8% in the past three months.