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Why Is Emerson Electric (EMR) Up 3.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for Emerson Electric (EMR - Free Report) . Shares have added about 3.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Emerson Electric due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Emerson's Q4 Earnings & Revenues Miss Estimates
Emerson reported fourth-quarter fiscal 2023 (ended Sep 30, 2023) adjusted earnings of $1.29 per share, which missed the Zacks Consensus Estimate of earnings of $1.30. However, the bottom line increased 21% in the reported quarter.
Emerson’s net sales of $4,090 million missed the consensus estimate of $4,204 million. However, the top line increased 5% year over year, driven by a solid segmental performance. Underlying sales were up 5% as well.
Segmental Details
Effective from the fiscal first quarter of 2023, the company started reporting under two segments, namely Intelligent Devices and Software and Control Automation Solutions.
The Intelligent Devices segments’ net sales were $3,146 million, increasing 6% year over year. Our estimate for segmental revenues was $3,191.1 million. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity.
Final Control’s revenues increased to $1,081 million from $1,001 million in the fourth quarter of fiscal 2023. Measurement & Analytical generated revenues of $1,045 million, up from $921 million reported in the year-ago period. Discrete Automation’s revenues totaled $666 million compared with $718 million reported in the year-ago fiscal quarter. Safety & Productivity’s revenues increased to $354 million from $336 million reported in the year-ago fiscal quarter.
The Software and Control Automation Solutions segment generated net sales of $963 million in the fiscal fourth quarter, up 3% year over year. Our estimate for segmental revenues was $1,013.5 million. The segment consists of two subgroups, namely Control Systems & Software, and AspenTech. Control Systems & Software reported revenues of $714 million compared with $687 million reported in the year-ago quarter. AspenTech generated net sales of $249 million, down 1% year over year.
Margin Details
In the quarter under review, Emerson's cost of sales increased 0.7% year over year to $2,078 million. The pretax earnings margin in the quarter was 22.1% compared with 15.5% in the year-ago period. Adjusted EBITA margin was 25.5% compared with 24.7% in the year-ago quarter. Selling, general and administrative expenses increased 13.3% to $1,114 million.
Balance Sheet and Cash Flow
Exiting fourth-quarter fiscal 2023, Emerson had cash and cash equivalents of $8,051 million compared with $1,804 million in the year-ago period. Long-term debt was $7,610 million compared with $8,259 million in the year-ago period. In fiscal 2023, the company repaid long-term debt of $741 million.
In the same time period, the company generated net cash of $637 million from operating activities, reflecting a decrease of 78.2% from the year-ago period. Capital expenditure was $363 million, up from $299 million in the year-ago period.
The company paid out dividends of $1,198 million and repurchased common stocks worth $2000 million in the same time period.
1Q24 Outlook
For the first quarter of fiscal 2024, Emerson anticipates year-over-year net sales growth of 14-17.5% and underlying sales growth of 6.5-8.5%.
EMR anticipates earnings per share of $0.45-$0.50 for the first quarter of fiscal 2024. Adjusted earnings per share are anticipated to be $1.00-$1.05.
FY24 Outlook
Emerson anticipates net sales growth of 13-15.5% year over year in fiscal 2024. Underlying sales are expected to rise 4-6% in the fiscal year.
EMR anticipates earnings per share of $3.82-$4.02 for fiscal 2024. Adjusted earnings per share are estimated to be $5.15-$5.35. The company expects operating cash flow to be $3.0B-$3.1B for fiscal 2024. Free Cash Flow is anticipated to be $2.6B-$2.7B for the same period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Emerson Electric has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Emerson Electric has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Emerson Electric belongs to the Zacks Manufacturing - Electronics industry. Another stock from the same industry, A.O. Smith (AOS - Free Report) , has gained 8.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
A.O. Smith reported revenues of $937.5 million in the last reported quarter, representing a year-over-year change of +7.2%. EPS of $0.90 for the same period compares with $0.69 a year ago.
A.O. Smith is expected to post earnings of $0.93 per share for the current quarter, representing a year-over-year change of +8.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for A.O. Smith. Also, the stock has a VGM Score of B.
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Why Is Emerson Electric (EMR) Up 3.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Emerson Electric (EMR - Free Report) . Shares have added about 3.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Emerson Electric due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Emerson's Q4 Earnings & Revenues Miss Estimates
Emerson reported fourth-quarter fiscal 2023 (ended Sep 30, 2023) adjusted earnings of $1.29 per share, which missed the Zacks Consensus Estimate of earnings of $1.30. However, the bottom line increased 21% in the reported quarter.
Emerson’s net sales of $4,090 million missed the consensus estimate of $4,204 million. However, the top line increased 5% year over year, driven by a solid segmental performance. Underlying sales were up 5% as well.
Segmental Details
Effective from the fiscal first quarter of 2023, the company started reporting under two segments, namely Intelligent Devices and Software and Control Automation Solutions.
The Intelligent Devices segments’ net sales were $3,146 million, increasing 6% year over year. Our estimate for segmental revenues was $3,191.1 million. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity.
Final Control’s revenues increased to $1,081 million from $1,001 million in the fourth quarter of fiscal 2023. Measurement & Analytical generated revenues of $1,045 million, up from $921 million reported in the year-ago period. Discrete Automation’s revenues totaled $666 million compared with $718 million reported in the year-ago fiscal quarter. Safety & Productivity’s revenues increased to $354 million from $336 million reported in the year-ago fiscal quarter.
The Software and Control Automation Solutions segment generated net sales of $963 million in the fiscal fourth quarter, up 3% year over year. Our estimate for segmental revenues was $1,013.5 million. The segment consists of two subgroups, namely Control Systems & Software, and AspenTech.
Control Systems & Software reported revenues of $714 million compared with $687 million reported in the year-ago quarter. AspenTech generated net sales of $249 million, down 1% year over year.
Margin Details
In the quarter under review, Emerson's cost of sales increased 0.7% year over year to $2,078 million. The pretax earnings margin in the quarter was 22.1% compared with 15.5% in the year-ago period. Adjusted EBITA margin was 25.5% compared with 24.7% in the year-ago quarter. Selling, general and administrative expenses increased 13.3% to $1,114 million.
Balance Sheet and Cash Flow
Exiting fourth-quarter fiscal 2023, Emerson had cash and cash equivalents of $8,051 million compared with $1,804 million in the year-ago period. Long-term debt was $7,610 million compared with $8,259 million in the year-ago period. In fiscal 2023, the company repaid long-term debt of $741 million.
In the same time period, the company generated net cash of $637 million from operating activities, reflecting a decrease of 78.2% from the year-ago period. Capital expenditure was $363 million, up from $299 million in the year-ago period.
The company paid out dividends of $1,198 million and repurchased common stocks worth $2000 million in the same time period.
1Q24 Outlook
For the first quarter of fiscal 2024, Emerson anticipates year-over-year net sales growth of 14-17.5% and underlying sales growth of 6.5-8.5%.
EMR anticipates earnings per share of $0.45-$0.50 for the first quarter of fiscal 2024. Adjusted earnings per share are anticipated to be $1.00-$1.05.
FY24 Outlook
Emerson anticipates net sales growth of 13-15.5% year over year in fiscal 2024. Underlying sales are expected to rise 4-6% in the fiscal year.
EMR anticipates earnings per share of $3.82-$4.02 for fiscal 2024. Adjusted earnings per share are estimated to be $5.15-$5.35. The company expects operating cash flow to be $3.0B-$3.1B for fiscal 2024. Free Cash Flow is anticipated to be $2.6B-$2.7B for the same period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Emerson Electric has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Emerson Electric has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Emerson Electric belongs to the Zacks Manufacturing - Electronics industry. Another stock from the same industry, A.O. Smith (AOS - Free Report) , has gained 8.6% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
A.O. Smith reported revenues of $937.5 million in the last reported quarter, representing a year-over-year change of +7.2%. EPS of $0.90 for the same period compares with $0.69 a year ago.
A.O. Smith is expected to post earnings of $0.93 per share for the current quarter, representing a year-over-year change of +8.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for A.O. Smith. Also, the stock has a VGM Score of B.