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Emerson Electric (EMR) Q1 Earnings & Revenues Top Estimates

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Zacks Equity Research
·4 min read
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Emerson Electric Co.’s EMR first-quarter fiscal 2021 (ended Dec 31, 2020) adjusted earnings of 83 cents per share beat the Zacks Consensus Estimate of 68 cents. On a year-over-year basis, the bottom line improved 23.9%.

Inside the Headlines

Emerson’s net sales were $4,161 million in the quarter, reflecting an increase of 0.2% from the year-ago quarter. Underlying sales were down 2%, while both acquired assets and forex woes had each 1% positive impact on sales. Notably, the top line beat the Zacks Consensus Estimate of $3,955 million.

The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal first-quarter segmental results are briefly discussed below:

Automation Solutions’ net sales were $2,692 million, decreasing 5.6% year over year. Underlying sales of the segment declined 9%. Commercial & Residential Solutions generated net sales of $1,476 million in the fiscal first quarter, up 13.3% year over year. Underlying sales were up 12%. Under the segment, Climate Technologies’ sales increased 18.1% to $1,031 million, and that from Tools & Home Products jumped 3.5% to $445 million.

Emerson Electric Co. Price and EPS Surprise

Emerson Electric Co. Price and EPS Surprise
Emerson Electric Co. Price and EPS Surprise

Emerson Electric Co. price-eps-surprise | Emerson Electric Co. Quote

Gross Margin

In the quarter under review, Emerson's cost of sales increased 1.9% year over year to $2,438 million. It represented 58.6% of net sales compared with 57.6% in the year-ago quarter. Gross margin was at 41.4%, down 100 basis points. Selling, general and administrative (SG&A) expenses declined 11.1% to $998 million. As a percentage of sales, SG&A expenses were 24% compared with 27.1% in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting first-quarter fiscal 2021, Emerson had cash and cash equivalents of $2,197 million, up from $1,635 million at the year-ago quarter. Long-term debt balance increased 46.6% to $5,892 million. During the first three months of fiscal 2021, the company repaid debts of $301 million.

In first three months of fiscal 2021, it generated net cash of $808 million from operating activities, reflecting an increase of 90.6% from the year ago period. Capital expenditure was $122 million, up from $114 million.

During the quarter, the company paid out dividends amounting to $303 million and repurchased shares worth $13 million.

Outlook

For fiscal 2021 (ending September 2021), it anticipates net sales growth of 4-8%. Underlying sales are expected to be flat to 4% up.

Adjusted earnings per share are predicted to be $3.70 for fiscal 2021.

Emerson expects Automation Solutions’ net sales to grow in the range of 2-6%, while Commercial & Residential Solutions’ net sales are projected to increase 10-12%.

Notably, the company anticipates a gradual improvement in demand environment in the fiscal second quarter and ahead.

Zacks Rank & Other Stocks to Consider

The company currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks are Franklin Electric Co., Inc. FELE, SPX FLOW, Inc. FLOW and Danaher Corporation DHR, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Franklin Electric delivered a positive earnings surprise of 12.82%, on average, in the trailing four quarters.

SPX FLOW delivered a positive earnings surprise of 146.55%, on average, in the trailing four quarters.

Danaher delivered a positive earnings surprise of 19.86%, on average, in the trailing four quarters.

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Emerson Electric Co. (EMR) : Free Stock Analysis Report

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