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Emerson (EMR) to Report Q4 Earnings: What's in the Offing?

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  • EMR

Emerson Electric Co. EMR is set to release fourth-quarter fiscal 2021 (ended September 2021) results on Nov 3, before market open.

The company’s earnings beat estimates in each of the last four quarters, the surprise being 14.21%, on average. In the last reported quarter, Emerson’s earnings of $1.09 per share beat the Zacks Consensus Estimate of 98 cents by 11.22%.

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In the past three months, the company’s shares have lost 2.7% compared with the industry’s decline of 0.9%.

Factors at Play

Strength across medical, life science, process automation, food and beverage, cold chain, residential, and commercial end markets is expected to have augmented Emerson’s top-line performance in fourth-quarter fiscal 2021. The company’s robust backlog level at the Automation Solutions segment, which was $5.5 billion exiting the fiscal third quarter (ended June 2021), is likely to have acted as a tailwind in the quarter.

Acquisitions made by the company positively impacted its revenues by 1% in the fiscal third quarter, a trend which is likely to have continued in the to-be-reported quarter as well, given the strength across its acquired businesses. Emerson’s buyouts of 7AC Technologies (November 2020), Open Systems International and Progea Group (both in October 2020) as well as Verdant (March 2020) have been strengthening its growth opportunities in the end markets. For fiscal 2021 (ended September 2021), it expects acquisitions to have a positive impact of 1% on sales growth.

Emerson’s focus on improving operational productivity and a solid liquidity position are likely to have supported its fiscal fourth-quarter performance.

However, over the past few quarters, rising cost of sales and operating expenses have been a concern for Emerson. In third-quarter fiscal 2021, its cost of sales increased 18.2% year over year while selling and administrative expenses jumped 14.9%. Despite its focus on supply-chain optimization, it has been witnessing supply-chain challenges and an increase in labor and raw material costs. High costs and expenses might have adversely impacted its margin and profitability in the to-be-reported quarter.

The Zacks Consensus Estimate for the company’s fiscal fourth-quarter total revenues is currently pegged at $5,107 million, suggesting 12% and 8.7% growth from the year-ago and the quarter-ago reported numbers, respectively. The consensus estimate for earnings of $1.19 suggests an improvement of 8.2% year over year and 9.2% sequentially.

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

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat. But that is not the case here as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Emerson has an Earnings ESP of -1.14%, as the Most Accurate Estimate is pegged at $1.18, lower than the Zacks Consensus Estimate of $1.19.

Zacks Rank: The company carries a Zacks Rank #3.

Key Picks

Here are some companies you may want to consider from the Zacks Industrial Products sector as our model shows that these have the right combination of elements to deliver an earnings beat this season:

Deere & Company DE has an Earnings ESP of +5.55% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Johnson Controls International plc JCI has an Earnings ESP of +0.17% and a Zacks Rank of 2, at present.

Plug Power, Inc. PLUG has an Earnings ESP of +2.41% and a Zacks Rank of 3.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Johnson Controls International plc (JCI) : Free Stock Analysis Report

Deere & Company (DE) : Free Stock Analysis Report

Plug Power, Inc. (PLUG) : Free Stock Analysis Report

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