Looking at Emerson Electric Co.’s (NYSE:EMR) earnings update in September 2018, analysts seem cautiously optimistic, as a 2.9% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of -5.3%. With trailing-twelve-month net income at current levels of US$2.2b, we should see this rise to US$2.3b in 2020. Below is a brief commentary on the longer term outlook the market has for Emerson Electric. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
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What can we expect from Emerson Electric in the longer term?
The longer term view from the 24 analysts covering EMR is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of EMR’s earnings growth over these next few years.
From the current net income level of US$2.2b and the final forecast of US$2.5b by 2022, the annual rate of growth for EMR’s earnings is 4.8%. This leads to an EPS of $4.22 in the final year of projections relative to the current EPS of $3.49. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 13% to 12% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Emerson Electric, I’ve compiled three essential factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Emerson Electric worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Emerson Electric is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Emerson Electric? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.