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Here's Why Investors Should Bet on Emerson (EMR) Stock Now
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Emerson Electric Co. (EMR - Free Report) is poised to gain from solid momentum in the Intelligent Devices segment and accretive acquisitions. The company’s measures to reward its shareholders are encouraging.
Let’s delve into the factors that make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.
What’s Aiding EMR?
End-Market Strength: Emerson has been experiencing healthy demand across most of its end markets. Solid demand in the process and hybrid industries is boosting underlying sales. The company anticipates sales in the process industry to be robust in fiscal 2024 (ending September 2024), driven by strength in energy, LNG, chemical and power end markets. Also, solid life sciences project momentum in North America and robust metals and mining activity bode well for the hybrid industry.
Segmental Strength: EMR is benefiting from the strong performance of the Intelligent Devices and Software and Control segments. Within the Intelligent Devices segment, the company is seeing strength in the Final Control business, driven by solid momentum in energy and power end markets. Robust growth in all geographies and strong backlog conversion levels are aiding the Measurement & Analytical business.
Within the Software and Control segment, strength in the process industry, driven by energy transition and traditional energy markets, is supporting the Control Systems & Software business. Strength in aerospace and defense end markets, driven by rising U.S. defense budget and increasing government research, is supporting the Test & Measurement business’s growth.
Expansion Efforts: Emerson believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. Notably, acquisitions had a positive impact of 10% on net sales growth in the second quarter of fiscal 2024. In the fourth quarter of fiscal 2023 (ended September 2023), the company completed the acquisitions of Afag and Flexim.
The buyout of Afag expanded Emerson’s capabilities in factory automation, thus helping it expand into lucrative end markets, battery manufacturing, automotive, packaging, medical, life sciences and electronics. The acquisition of Flexim added to its existing flow measurement positions in coriolis, differential pressure, magmeter and vortex flow measurement and expanded its automation portfolio and measurement capabilities.
Also, in October 2023, Emerson completed the buyout of National Instruments for $8.2 billion. The acquisition was in sync with its focus on global automation to drive growth and profitability. The buyout strengthened EMR’s global automation foothold, helping it expand into high-growth end markets, including semiconductor and electronics, transportation and electric vehicles and aerospace and defense. Apart from broadening automation capabilities, the buyout opened up industrial software opportunities for it. Emerson reports the results of National Instruments under the sub-business, Test & Measurement, within the Software and Control group.
Rewards to Shareholders: Emerson’s measures to reward its shareholders through dividend payments are noteworthy. In the first six months of 2024 (ended March 2024), it paid out dividends of $600 million and repurchased common stocks worth $175 million. In October 2023, the company hiked its dividend by 1%. Emerson plans to repurchase shares worth $500 million and pay out dividends of $1.2 billion in fiscal 2024. It expects a free cash flow of approximately $2.7 billion for the fiscal year.
Northward Estimate Revision: The Zacks Consensus Estimate for EMR’s fiscal 2024 earnings has been revised 1.3% upward in the past 60 days.
Price Performance: Shares of the company have gained 12.5% in the year-to-date period.
Image Source: Zacks Investment Research
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Some other top-ranked companies from the Industrial Products sector are discussed below:
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 0.9% in the past 60 days. The stock has risen 10.8% in the year-to-date period.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank of 2 and has a trailing four-quarter earnings surprise of 6.7%, on average.
The consensus estimate for BRC’s fiscal 2024 earnings has increased 3.3% in the past 60 days. Shares of Brady have gained 11.3% in the year-to-date period.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has increased 0.8% in the past 60 days. Its shares have gained 22.4% in the year-to-date period.
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Here's Why Investors Should Bet on Emerson (EMR) Stock Now
Emerson Electric Co. (EMR - Free Report) is poised to gain from solid momentum in the Intelligent Devices segment and accretive acquisitions. The company’s measures to reward its shareholders are encouraging.
Let’s delve into the factors that make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.
What’s Aiding EMR?
End-Market Strength: Emerson has been experiencing healthy demand across most of its end markets. Solid demand in the process and hybrid industries is boosting underlying sales. The company anticipates sales in the process industry to be robust in fiscal 2024 (ending September 2024), driven by strength in energy, LNG, chemical and power end markets. Also, solid life sciences project momentum in North America and robust metals and mining activity bode well for the hybrid industry.
Segmental Strength: EMR is benefiting from the strong performance of the Intelligent Devices and Software and Control segments. Within the Intelligent Devices segment, the company is seeing strength in the Final Control business, driven by solid momentum in energy and power end markets. Robust growth in all geographies and strong backlog conversion levels are aiding the Measurement & Analytical business.
Within the Software and Control segment, strength in the process industry, driven by energy transition and traditional energy markets, is supporting the Control Systems & Software business. Strength in aerospace and defense end markets, driven by rising U.S. defense budget and increasing government research, is supporting the Test & Measurement business’s growth.
Expansion Efforts: Emerson believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. Notably, acquisitions had a positive impact of 10% on net sales growth in the second quarter of fiscal 2024. In the fourth quarter of fiscal 2023 (ended September 2023), the company completed the acquisitions of Afag and Flexim.
The buyout of Afag expanded Emerson’s capabilities in factory automation, thus helping it expand into lucrative end markets, battery manufacturing, automotive, packaging, medical, life sciences and electronics. The acquisition of Flexim added to its existing flow measurement positions in coriolis, differential pressure, magmeter and vortex flow measurement and expanded its automation portfolio and measurement capabilities.
Also, in October 2023, Emerson completed the buyout of National Instruments for $8.2 billion. The acquisition was in sync with its focus on global automation to drive growth and profitability. The buyout strengthened EMR’s global automation foothold, helping it expand into high-growth end markets, including semiconductor and electronics, transportation and electric vehicles and aerospace and defense. Apart from broadening automation capabilities, the buyout opened up industrial software opportunities for it. Emerson reports the results of National Instruments under the sub-business, Test & Measurement, within the Software and Control group.
Rewards to Shareholders: Emerson’s measures to reward its shareholders through dividend payments are noteworthy. In the first six months of 2024 (ended March 2024), it paid out dividends of $600 million and repurchased common stocks worth $175 million. In October 2023, the company hiked its dividend by 1%. Emerson plans to repurchase shares worth $500 million and pay out dividends of $1.2 billion in fiscal 2024. It expects a free cash flow of approximately $2.7 billion for the fiscal year.
Northward Estimate Revision: The Zacks Consensus Estimate for EMR’s fiscal 2024 earnings has been revised 1.3% upward in the past 60 days.
Price Performance: Shares of the company have gained 12.5% in the year-to-date period.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 8.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 0.9% in the past 60 days. The stock has risen 10.8% in the year-to-date period.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank of 2 and has a trailing four-quarter earnings surprise of 6.7%, on average.
The consensus estimate for BRC’s fiscal 2024 earnings has increased 3.3% in the past 60 days. Shares of Brady have gained 11.3% in the year-to-date period.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has increased 0.8% in the past 60 days. Its shares have gained 22.4% in the year-to-date period.