EMR

What Should You Know About Emerson Electric Company (EMR)?

It hasn't been a great evening session for Emerson Electric Company investors, who have watched their shares sink by -7.4% to a price of $84.94. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.

Emerson Electric Company Is Potentially Undervalued and Trades Below Its Graham Number:

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. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, Emerson Electric Company has a trailing 12 month P/E ratio of 15.2 and a P/B ratio of 2.37.

Emerson Electric Company's PEG ratio is 1.33, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Low Leverage Levels and Exceptional EPS Growth:

2018 2019 2020 2021 2022 2023
Revenue (MM) $17,408 $18,372 $16,785 $18,236 $19,629 $16,435
Operating Margins 15.0% 16.0% 14.0% 16.0% 21.0% 28.0%
Net Margins 13.0% 13.0% 12.0% 13.0% 16.0% 80.0%
Net Income (MM) $2,224 $2,328 $1,990 $2,327 $3,231 $13,215
Net Interest Expense (MM) -$159 -$174 -$156 -$154 -$193 -$155
Depreciation & Amort. (MM) $758 $822 $854 $969 $1,039 $1,166
Earnings Per Share $3.46 $3.71 $3.24 $3.82 $5.41 $22.87
Diluted Shares (MM) 635 621 607 602 596 551
Free Cash Flow (MM) $2,275 $2,412 $2,545 $2,994 $2,391 $1,971
Capital Expenditures (MM) $617 $594 $538 $581 $531 $526
Net Current Assets (MM) -$2,522 -$803 $303 $4,643 -$2,866 $4,982
Long Term Debt (MM) $2,641 $4,018 $5,892 $8,722 $8,159 $7,642
Net Debt / EBITDA 1.38 1.19 1.7 1.04 1.5 -0.29

Emerson Electric Company has exceptional EPS growth, low leverage, and decent operating margins with a positive growth rate. Furthermore, Emerson Electric Company has weak revenue growth and a flat capital expenditure trend and irregular cash flows.

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.

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