Here's Why You Should Hold on to Emerson (EMR) Stock Now
Emerson Electric Co. EMR is gaining from the strong demand in the process and hybrid markets despite adversities from increasing costs and foreign exchange headwinds.
What’s Aiding EMR?
Strength in the measurement and analytical, and final control businesses, due to strong demand in the hybrid and process end markets, is benefiting Emerson’s Intelligent Devices business unit. Improved supply chains, easier availability of electronic components, and strong backlogs are driving growth of the Software and Control business group.
Growth in energy transition and energy security is aiding the company’s process end market. Strength in the life sciences, metals and mining markets is supporting the hybrid end market’s revenues. Given the strength across its end markets, Emerson has raised its fiscal 2023 (ending September 2023) guidance. For fiscal 2023, the company expects net sales to increase 10.5% compared with a rise of 9-10.5% predicted earlier. Underlying sales are expected to increase approximately 10% compared with 8.5-10% rise estimated earlier.
Acquisitions have been Emerson's preferred mode of business expansion so far. In August, the company announced two separate deals to acquire Afag and Flexim. The acquisition of Afag will expand Emerson’s capabilities in factory automation, helping the company expand into lucrative end markets — battery manufacturing, automotive, packaging, medical, life sciences and electronics — currently served by Afag. The acquisition of Flexim will add to EMR’s existing flow measurement positions in coriolis, differential pressure, magmeter and vortex flow measurement and expand its automation portfolio and measurement capabilities. Both acquisitions are expected to close by the end of Emerson’s fiscal 2023.
The company’s efforts to reward its shareholders through dividend payments are noteworthy. In the first nine months of fiscal 2023 (ended June 2023), it paid dividends of $900 million. For 2023, the company expects to pay out dividends of approximately $1.2 billion. It is worth noting that in October 2022, the company hiked the quarterly dividend rate by 1%.
In light of the above-mentioned positives, we believe, investors should retain EMR stock for now, as suggested by its current Zacks Rank #3 (Hold). Shares of the company have gained 9.9% in the past year.
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Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Caterpillar Inc. CAT presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
CAT’s earnings surprise in the last four quarters was 18.5%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased 10.3% for 2023. The stock has gained 37.2% in the past year.
A. O. Smith Corp. AOS presently carries a Zacks Rank #2 (Buy). AOS’ earnings surprise in the last four quarters was 10.5%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 2.9% for 2023. The stock has gained 14.5% in the past year.
Alamo Group Inc. ALG presently carries a Zacks Rank of 2.ALG’s earnings surprise in the last four quarters was 13%, on average.
In the past 60 days, estimates for Alamo’s 2023 earnings have increased 1.1%. The stock has gained 25.3% in the past year.
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Caterpillar Inc. (CAT) : Free Stock Analysis Report
Emerson Electric Co. (EMR) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Alamo Group, Inc. (ALG) : Free Stock Analysis Report
