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Here's Why You Should Consider Investing in Emerson (EMR) Stock

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Emerson Electric Co. EMR is well poised for growth courtesy of strength across its end markets, strong product offerings, acquired assets, and a sound capital-deployment strategy.

The Zacks Rank #2 (Buy) company has a market capitalization of $61.6 billion. In the past six months, the stock has appreciated 12.4% compared with the industry’s growth of 7.9%.

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Zacks Investment Research


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Let’s delve into the factors that make this company investment-worthy at the moment.

Strong End Markets: Emerson is likely to gain from strength across its medical, life science, food and beverage, cold chain, residential and commercial end markets. Also, improvement in process automation end markets in North America is likely to drive its performance, going forward. Exiting third-quarter fiscal 2021 (ended June 2021), the company’s robust backlog level — which was $5.5 billion at its Automation Solutions segment — will support its top-line performance in the quarters ahead.

Benefits From Acquisitions: Emerson completed the acquisition of Open Systems International and Progea Group in the first quarter of fiscal 2021 (ended December 2020). While the Open Systems buyout has been strengthening the company’s offerings under the Automation Solutions segment, the Progea acquisition has been enhancing offerings within control and embedded software space. The acquisition of 7AC Technologies (in first-quarter fiscal 2021) has been augmenting its offerings in heating, ventilation, and air conditioning space. It expects the acquisitions to have a positive impact of 1% on sales growth in fiscal 2021 (ending September 2021).

Healthy Cash Flow & Shareholder-Friendly Policies: The company’s ability to generate solid cash flows adds to its strength. In the first nine months of fiscal 2021, its free cash flow grew 55% year over year to $2,370 million. For fiscal 2021, it anticipates free cash flow of $3 billion. It is committed toward rewarding shareholders through share-repurchase programs and dividend payouts. In the first nine months of fiscal 2021, the company paid dividends worth $909 million and repurchased shares worth $268 million. In November 2020, it also hiked the annual dividend rate by 2 cents.

Estimate Revisions: In the past 30 days, the Zacks Consensus Estimate for Emerson’s fiscal 2021 earnings has trended up from $4.05 to $4.08 on two upward estimate revisions against none downward. The consensus estimate for fiscal 2022 (ending September 2022) earnings increased from $4.49 to $4.55 on two upward estimate revisions against none downward.

Other Key Picks

Some other top-ranked stocks from the same space are AZZ Inc. AZZ, Eaton Corporation plc ETN, and Rexnord Corporation RXN, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AZZ pulled off a trailing four-quarter earnings surprise of 21.24%, on average.

Eaton pulled off a trailing four-quarter earnings surprise of 10.87%, on average.

Rexnord pulled off a trailing four-quarter earnings surprise of 11.96%, on average.


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

Eaton Corporation, PLC (ETN) : Free Stock Analysis Report

AZZ Inc. (AZZ) : Free Stock Analysis Report

Rexnord Corporation (RXN) : Free Stock Analysis Report

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