Emerson Electric Company (EMR) Dips Slightly Despite Strong Fundamentals

Now trading at a price of $91.06, Emerson Electric Company has moved -0.8% so far today.

Emerson Electric Co., a technology and engineering company, provides various solutions for customers in industrial, commercial, and consumer markets in the Americas, Asia, the Middle East, Africa, and Europe. Based in Saint Louis, MO, the large-cap Technology company has 85,500 full time employees. Emerson Electric Company has offered a 2.3% dividend yield over the last 12 months.

Wider Gross Margins Than the Industry Average of 32.29%:

2019-09-30 2020-09-30 2021-09-30 2022-09-30
Revenue (MM) $18,372 $16,785 $18,236 $19,629
Gross Margins 42.5% 41.8% 41.5% 41.7%
Operating Margins 17.0% 18.0% 16.9% 18.2%
Net Margins 12.55% 11.71% 12.63% 16.46%
Net Income (MM) $2,306 $1,965 $2,303 $3,231
Net Interest Expense (MM) -$174 -$156 -$154 -$193
Depreciation & Amort. (MM) -$822 -$854 -$969 -$1,039
Earnings Per Share $3.71 $3.24 $3.82 $4.9
EPS Growth n/a -12.67% 17.9% 28.27%
Diluted Shares (MM) 621 607 602 572
Free Cash Flow (MM) $2,412 $2,545 $2,994 $2,391
Capital Expenditures (MM) -$594 -$538 -$581 -$531
Net Current Assets (MM) -$5,085 -$5,629 -$6,360 -$10,850
Current Ratio 1.19 1.52 1.35 1.09
Long Term Debt (MM) $4,277 $6,326 $5,793 $8,259
Net Debt / EBITDA 1.1 1.26 1.07 1.61

Emerson Electric Company has strong margins with a stable trend, a steady stream of strong cash flows, and stable revenues and a flat capital expenditure trend. The company also benefits from wider gross margins than its peer group, positive EPS growth, and healthy leverage. Furthermore, Emerson Electric Company has just enough current assets to cover current liabilities.

A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:

Emerson Electric Company has a trailing twelve month P/E ratio of 17.4, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of $4.63, the company has a forward P/E ratio of 18.4. The 4.5% compound average growth rate of Emerson Electric Company's historical and projected earnings per share yields a PEG ratio of 3.85. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing Emerson Electric Company in terms of its equity because its P/B ratio is 4.58 while the sector average is 6.23. The company's shares are currently trading 117.5% above their Graham number.

Emerson Electric Company Has an Average Rating of Buy:

The 21 analysts following Emerson Electric Company have set target prices ranging from $89.0 to $120.0 per share, for an average of $103.9 with a buy rating. As of April 2023, the company is trading -17.8% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Emerson Electric Company has a very low short interest because 1.0% of the company's shares are sold short. Institutions own 78.1% of the company's shares, and the insider ownership rate stands at 0.33%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $4,781,040,099.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.