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Emerson Electric Co. (EMR - Free Report) reported second-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of $1.36 per share, which beat the Zacks Consensus Estimate of $1.26. The bottom line increased 25% year over year.
Emerson’s net sales of $4.38 billion beat the consensus estimate of $4.29 billion. The top line increased 17% year over year, driven by a solid segmental performance. The underlying sales were up 8% year over year.
Segmental Details
Effective from the first quarter of fiscal 2023, the company started reporting under two segments, namely Intelligent Devices, and Software and Control Automation Solutions.
The Intelligent Devices segments’ net sales were $3.06 billion, up 5% year over year. Our estimate was $2.96 billion. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity.
Final Control’s revenues increased 6% year over year to $1.05 billion. Measurement & Analytical generated revenues of $1.01 billion, up 14% year over year. Discrete Automation’s revenues totaled $632 million, reflecting a decline of 8% on a year-over-year basis. Safety & Productivity’s revenues increased 1% year over year to $365 million.
The Software and Control Automation Solutions segment generated net sales of $1.33 billion, up 56% year over year. Our estimate was $1.31 billion. The segment consists of three subgroups, namely Control Systems & Software, AspenTech and Test & Measurement.
Control Systems & Software reported revenues of $687 million, reflecting an increase of 11% year over year. AspenTech generated net sales of $278 million, up 21% year over year. Test & Measurement revenues of $367 million remained flat on a year-over-year basis.
Emerson Electric Co. Price, Consensus and EPS Surprise
Cost of sales increased 7% year over year to $2.09 billion. The pretax earnings margin was 14.9% compared with 17% in the year-ago period. Adjusted EBITA margin was 24.5% compared with 23.3% in the year-earlier quarter. Selling, general and administrative expenses increased 29.6% year over year to $1.3 billion.
Balance Sheet & Cash Flow
Exiting second-quarter fiscal 2024, Emerson had cash and cash equivalents of $2.3 billion compared with $8.1 billion at the end of fiscal 2023 (ended September 2023). Long-term debt of $7.61 billion remained relatively stable compared with the figure reported at the end of fiscal 2023. In the first six months of fiscal 2024, the company made a payment of long-term debt worth $1 million.
In the same period, the company generated net cash of $1.16 billion from operating activities, up 138.3% year over year. Capital expenditure was $159 million, up from $121 million in the year-ago period. Emerson paid out dividends of $600 million in the quarter under review.
Q3 Outlook
For the third quarter of fiscal 2024 (ending June 2024), Emerson anticipates net sales growth of 11.0-12.5% and underlying sales growth of 3.0-4.5% from the year-ago levels.
EMR anticipates earnings per share of 92-96 cents. Adjusted earnings per share are anticipated to be $1.38-$1.42.
FY24 Outlook Revised
Emerson has updated its sales outlook for fiscal 2024. The company now anticipates net sales growth of 15-16% from the year-earlier levels compared with 14.5-17% expected before. Underlying sales are expected to rise 5.5-6.5% compared with 4.5-6.5% anticipated earlier.
EMR projects earnings per share of $2.98-$3.08 compared with $2.80-$2.95 expected earlier. Adjusted earnings per share are estimated in the range of $5.40-$5.50 compared with $5.30-$5.45 expected earlier. The company expects operating cash flow to be $3.1 billion. Free cash flow is suggested to be $2.7 billion.
Zacks Rank & Other Key Picks
EMR currently carries a Zacks Rank #2 (Buy). Here are some other top-ranked stocks from the Zacks Industrial Products sector:
The Zacks Consensus Estimate for LXFR’s 2024 earnings has remained stable in the past 60 days.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 15.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 3.3%.
RBC Bearings Incorporated (RBC - Free Report) currently carries a Zacks Rank of 2. RBC delivered a trailing four-quarter average earnings surprise of 6.4%.
In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 0.6%.
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Emerson (EMR) Q2 Earnings Surpass Estimates, Sales Rise Y/Y
Emerson Electric Co. (EMR - Free Report) reported second-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of $1.36 per share, which beat the Zacks Consensus Estimate of $1.26. The bottom line increased 25% year over year.
Emerson’s net sales of $4.38 billion beat the consensus estimate of $4.29 billion. The top line increased 17% year over year, driven by a solid segmental performance. The underlying sales were up 8% year over year.
Segmental Details
Effective from the first quarter of fiscal 2023, the company started reporting under two segments, namely Intelligent Devices, and Software and Control Automation Solutions.
The Intelligent Devices segments’ net sales were $3.06 billion, up 5% year over year. Our estimate was $2.96 billion. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity.
Final Control’s revenues increased 6% year over year to $1.05 billion. Measurement & Analytical generated revenues of $1.01 billion, up 14% year over year. Discrete Automation’s revenues totaled $632 million, reflecting a decline of 8% on a year-over-year basis. Safety & Productivity’s revenues increased 1% year over year to $365 million.
The Software and Control Automation Solutions segment generated net sales of $1.33 billion, up 56% year over year. Our estimate was $1.31 billion. The segment consists of three subgroups, namely Control Systems & Software, AspenTech and Test & Measurement.
Control Systems & Software reported revenues of $687 million, reflecting an increase of 11% year over year. AspenTech generated net sales of $278 million, up 21% year over year. Test & Measurement revenues of $367 million remained flat on a year-over-year basis.
Emerson Electric Co. Price, Consensus and EPS Surprise
Emerson Electric Co. price-consensus-eps-surprise-chart | Emerson Electric Co. Quote
Margin Details
Cost of sales increased 7% year over year to $2.09 billion. The pretax earnings margin was 14.9% compared with 17% in the year-ago period. Adjusted EBITA margin was 24.5% compared with 23.3% in the year-earlier quarter. Selling, general and administrative expenses increased 29.6% year over year to $1.3 billion.
Balance Sheet & Cash Flow
Exiting second-quarter fiscal 2024, Emerson had cash and cash equivalents of $2.3 billion compared with $8.1 billion at the end of fiscal 2023 (ended September 2023). Long-term debt of $7.61 billion remained relatively stable compared with the figure reported at the end of fiscal 2023. In the first six months of fiscal 2024, the company made a payment of long-term debt worth $1 million.
In the same period, the company generated net cash of $1.16 billion from operating activities, up 138.3% year over year. Capital expenditure was $159 million, up from $121 million in the year-ago period. Emerson paid out dividends of $600 million in the quarter under review.
Q3 Outlook
For the third quarter of fiscal 2024 (ending June 2024), Emerson anticipates net sales growth of 11.0-12.5% and underlying sales growth of 3.0-4.5% from the year-ago levels.
EMR anticipates earnings per share of 92-96 cents. Adjusted earnings per share are anticipated to be $1.38-$1.42.
FY24 Outlook Revised
Emerson has updated its sales outlook for fiscal 2024. The company now anticipates net sales growth of 15-16% from the year-earlier levels compared with 14.5-17% expected before. Underlying sales are expected to rise 5.5-6.5% compared with 4.5-6.5% anticipated earlier.
EMR projects earnings per share of $2.98-$3.08 compared with $2.80-$2.95 expected earlier. Adjusted earnings per share are estimated in the range of $5.40-$5.50 compared with $5.30-$5.45 expected earlier. The company expects operating cash flow to be $3.1 billion. Free cash flow is suggested to be $2.7 billion.
Zacks Rank & Other Key Picks
EMR currently carries a Zacks Rank #2 (Buy). Here are some other top-ranked stocks from the Zacks Industrial Products sector:
Luxfer Holdings (LXFR - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 122.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LXFR’s 2024 earnings has remained stable in the past 60 days.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. It delivered a trailing four-quarter average earnings surprise of 15.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 3.3%.
RBC Bearings Incorporated (RBC - Free Report) currently carries a Zacks Rank of 2. RBC delivered a trailing four-quarter average earnings surprise of 6.4%.
In the past 60 days, the Zacks Consensus Estimate for its 2024 earnings has increased 0.6%.