Emerson Electric Co. (EMR) | Investment Case

1. Company Snapshot

1.a. Company Description

Emerson Electric Co., a technology and engineering company, provides various solutions for customers in industrial, commercial, and residential markets in the Americas, Asia, the Middle East, Africa, and Europe.The company operates through Automation Solutions, and Commercial & Residential Solutions segments.The Automation Solutions segment offers measurement and analytical instrumentation, industrial valves and equipment, and process control software and systems.

It serves oil and gas, refining, chemicals, power generation, life sciences, food and beverage, automotive, pulp and paper, metals and mining, and municipal water supplies markets.The Commercial & Residential Solutions segment offers residential and commercial heating and air conditioning products, such as reciprocating and scroll compressors; system protector and flow control devices; standard, programmable, and Wi-Fi thermostats; monitoring equipment and electronic controls for gas and electric heating systems; gas valves for furnaces and water heaters; ignition systems for furnaces; sensors and thermistors for home appliances; and temperature sensors and controls.It also provides reciprocating, scroll, and screw compressors; precision flow controls; system diagnostics and controls; and environmental control systems.

In addition, this segment offers air conditioning, refrigeration, and lighting control technologies, as well as facility design and product management, site commissioning, facility monitoring, and energy modeling services; tools for professionals and homeowners; and appliance solutions.Emerson Electric Co. was incorporated in 1890 and is headquartered in Saint Louis, Missouri.

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1.b. Last Insights on EMR

Emerson Electric's recent performance was driven by strong growth in Intelligent Devices and Software and Control segments. The company's Q1 earnings beat estimates, fueled by sales momentum from automation and software. Despite higher costs potentially pressuring margins, EMR's full ownership of AspenTech and business strength drive growth. Analysts at Stephens raised their price target on EMR to $155. Institutional investors, including Atria Investments and AlphaQuest, have increased their holdings.

1.c. Company Highlights

Last Price	138.33
Change Percentage	-1.26%
Open	139.36
Previous Close	140.1
Market Cap ( Millions)	77783
Volume	1045517
Year High	165.15
Year Low	90.06
M A 50	147.12
M A 200	136.44

FCF Yield	3.31%
Dividend Yield	1.57%
ROE	11.61%
Debt / Equity	68.60%
Net Debt / EBIDTA	244.03%
Price To Book	3.83
Price Earnings Ratio	33.6
Price To FCF	30.21
Price To sales	4.28
EV / EBITDA	18.03

2. Emerson Electric Co. Beats Expectations with Strong Q1 2026 Earnings

Emerson Electric Co.'s first quarter 2026 earnings report showcased robust financial performance, with underlying sales growth of 2% year over year and adjusted earnings per share (EPS) of $1.46, surpassing estimates of $1.42. The company's adjusted segment EBITDA margin exceeded expectations at 27.7%. The strong EPS was a result of disciplined execution, with all segments reporting growth. The company's backlog ended the quarter at $7.9 billion, up 9% year over year, and its book-to-bill was 1.13.

Publication Date: Feb -04

                                    📋 Highlights
                                    Shareholder Returns::
                                                $10 billion capital return plan (70% of 2026 cumulative cash) via $6 billion share repurchases and $4 billion dividends.
Q1 Financial Performance::
                                                2% underlying sales growth, 27.7% adjusted EBITDA margin (exceeding guidance), and $1.46 adjusted EPS.
Backlog Growth::
                                                $7.9 billion backlog (+9% YoY) with book-to-bill ratio of 1.13, supporting mid-single-digit 2026 sales growth.
Margin Guidance::
                                                2026 adjusted EBITDA margin guidance of ~28%, with 2H margins expected to trend toward 28% or higher.
Regional Strength::
                                                North America orders up 18% (driven by power and LNG), with $450 million in project wins and Ovation/T&M orders surging 74%/20%.

                                

Revenue Growth and Margin Analysis

The company's revenue growth was driven by strong customer activity, particularly in the power and LNG sectors, with North America's order number growing 18%. The Ovation business was up 74% and Test and Measurement (T&M) was up 20% in orders. The company's guidance for 2026 includes 5.5% sales growth, 4% underlying sales growth, and an adjusted segment EBITDA margin of approximately 28%. As Ram Krishnan noted, "AI can be complementary to growth for Emerson Electric Co., as its software offerings are built on first principle models and are not disrupted by AI."

Valuation Metrics and Future Expectations

With a P/E Ratio of 36.93 and an EV/EBITDA of 26.0, the market is pricing in a certain level of growth for Emerson Electric Co. Analysts estimate next year's revenue growth at 5.1%. The company's return on equity (ROE) is 11.61%, and its return on invested capital (ROIC) is 4.95%. The dividend yield is 1.41%, indicating a relatively stable return for shareholders. The company's guidance for Q2 2026 adjusted EPS is $1.5 to $1.55, reflecting good performance in Q1.

Regional Performance and Outlook

The company is seeing good activity in the test and measurement space in China, with the semiconductor business up in the high double digits. However, they continue to be concerned about low single-digit negative growth in China by the end of the year. In North America, high single-digit growth is expected to continue, driven by strong customer activity. The company is also watching the situation in Venezuela and is preparing to invest in the country when the time is right.

Tariffs and Margin Impact

The company has built in $130 million of tariffs into the plan but is seeing relief to that number. The Total Energy deal impacts Emerson Electric Co.'s adjusted segment EBITDA margin by approximately 150 basis points. The renewal dynamic reduces adjusted EPS by approximately $0.05 and adjusted segment EBITDA margin by approximately 40 basis points. The company's second half margins are expected to trend towards 28% or more.

3. NewsRoom

Fieldview Capital Management LLC Invests $486,000 in Emerson Electric Co. $EMR

08:23

Source: defenseworld.net

Emerson to Present at the 2026 J.P. Morgan Industrials Conference

Mar -10

Source: prnewswire.com

Emerson Electric Co. $EMR Shares Sold by Blair William & Co. IL

Mar -08

Source: defenseworld.net

Barclays PLC Has $120.57 Million Stock Holdings in Emerson Electric Co. $EMR

Mar -08

Source: defenseworld.net

B. Metzler seel. Sohn & Co. AG Cuts Stock Holdings in Emerson Electric Co. $EMR

Mar -08

Source: defenseworld.net

Emerson Electric Co. $EMR Shares Purchased by Elo Mutual Pension Insurance Co

Mar -03

Source: defenseworld.net

Looking for Passive Income in 2026? 5 Dividend Kings to Buy Hand Over Fist.

Mar -01

Source: fool.com

AXQ Capital LP Lowers Position in Emerson Electric Co. $EMR

Feb -28

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.25%)

6. Segments

Intelligent Devices - Final Control

Expected Growth: 6.1%

Emerson's Intelligent Devices Final Control segment is driven by increasing demand for industrial automation, digital transformation, and energy efficiency. The segment's growth is also fueled by its strong presence in the oil and gas industry, and its ability to provide customers with real-time data and insights to optimize their operations.

Intelligent Devices - Measurement & Analytical

Expected Growth: 6.5%

Emerson Electric Co.'s devices for measurement and analytics are expected to see significant growth driven by increasing demand for industrial automation, digitalization, and stringent regulations, leading to improved operational efficiency and reduced costs.

Software and Control - Control Systems & Software

Expected Growth: 5.6%

None

Software and Control - Test & Measurement

Expected Growth: 5.6%

Emerson Electric Co.’s test and measurement solutions growth is driven by increasing demand for industrial automation, IoT, and 5G technologies, as well as growing investments in renewable energy and infrastructure development.

Intelligent Devices - Discrete Automation

Expected Growth: 6.5%

Emerson Electric Co.’s discrete automation solutions drive efficiency and productivity, leveraging IoT and AI advancements, increasing demand from industries such as oil and gas, power generation, and manufacturing.

Intelligent Devices - Safety & Productivity

Expected Growth: 6.5%

Emerson’s safety and productivity solutions drive growth, as customers seek to minimize operational risks and optimize output. Industrial automation and digital transformation are key fundamental drivers.

Software and Control - Aspen Tech

Expected Growth: 7.4%

Increasing adoption of Industrial Internet of Things and artificial intelligence in process industries drives demand for AspenTech's software and control solutions, enhancing operational efficiency and profitability.

Eliminations

Expected Growth: 4.3%

Emerson Electric Co.'s Eliminations segment is driven by growing demand for industrial automation, increasing adoption of IoT technologies, and strategic acquisitions, leading to a forecasted CAGR of 4.3%.

7. Detailed Products

Automation Solutions

Emerson's automation solutions provide control systems, valves, and instruments to optimize plant performance and efficiency.

Commercial and Residential Solutions

Emerson's commercial and residential solutions offer heating, ventilation, and air conditioning (HVAC) systems, as well as refrigeration and cold chain management.

Network Power

Emerson's network power solutions provide AC and DC power systems, as well as outside plant and network infrastructure, for telecommunications and data centers.

Process Management

Emerson's process management solutions offer control systems, valves, and instruments to optimize process efficiency and safety in industries such as oil and gas, refining, and chemical.

Climate Technologies

Emerson's climate technologies provide heating, ventilation, and air conditioning (HVAC) systems, as well as refrigeration and cold chain management, for commercial and residential applications.

8. Emerson Electric Co.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Emerson Electric Co. operates in a industry where substitutes are available, but they are not a significant threat. The company's products are highly specialized and customized, making it difficult for substitutes to replace them.

Bargaining Power Of Customers

Emerson Electric Co. has a diverse customer base, which reduces the bargaining power of individual customers. The company's products are also critical to its customers' operations, making it difficult for them to negotiate prices.

Bargaining Power Of Suppliers

Emerson Electric Co. has a moderate level of dependence on its suppliers. While the company has a diverse supplier base, some of its suppliers have a high level of bargaining power due to their size and importance to the company's operations.

Threat Of New Entrants

The threat of new entrants in the industry is low due to the high barriers to entry, including the need for significant capital investment and specialized expertise. Emerson Electric Co. has a strong brand reputation and established relationships with customers, making it difficult for new entrants to gain traction.

Intensity Of Rivalry

The industry in which Emerson Electric Co. operates is highly competitive, with several established players competing for market share. The company must continually innovate and improve its products and services to maintain its market position.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	28.28%
Debt Cost	3.95%
Equity Weight	71.72%
Equity Cost	10.77%
WACC	8.84%
Leverage	39.43%

11. Quality Control: Emerson Electric Co. passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

AMETEK

A-Score: 5.3/10

Value: 1.8

Growth: 5.8

Quality: 7.7

Yield: 1.0

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

Emerson Electric

A-Score: 5.1/10

Value: 2.2

Growth: 4.1

Quality: 6.2

Yield: 4.0

Momentum: 6.0

Volatility: 8.3

1-Year Total Return ->

Dover

A-Score: 5.1/10

Value: 3.2

Growth: 4.9

Quality: 7.2

Yield: 2.0

Momentum: 4.5

Volatility: 8.7

1-Year Total Return ->

Otis

A-Score: 5.1/10

Value: 4.4

Growth: 4.4

Quality: 5.5

Yield: 3.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

Roper Technologies

A-Score: 5.0/10

Value: 3.0

Growth: 5.6

Quality: 7.4

Yield: 1.0

Momentum: 3.0

Volatility: 10.0

1-Year Total Return ->

Ingersoll Rand

A-Score: 4.2/10

Value: 2.1

Growth: 7.4

Quality: 6.0

Yield: 0.0

Momentum: 2.5

Volatility: 7.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

12.03%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.84%

Emerson Electric Co. - US2910111044

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on EMR

1.c. Company Highlights

Less Volatile

Fairly Valued

Average Yield

Earnings Beats

Revenues Beats

Expensive

Higher Yield

Revenues Miss

Medium Volatility

Average Growth

Average Quality

Lower Growth

2. Emerson Electric Co. Beats Expectations with Strong Q1 2026 Earnings

Revenue Growth and Margin Analysis

Valuation Metrics and Future Expectations

Regional Performance and Outlook

Tariffs and Margin Impact

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.25%)

6. Segments

Intelligent Devices - Final Control

Expected Growth: 6.1%

Intelligent Devices - Measurement & Analytical

Expected Growth: 6.5%

Software and Control - Control Systems & Software

Expected Growth: 5.6%

Software and Control - Test & Measurement

Expected Growth: 5.6%

Intelligent Devices - Discrete Automation

Expected Growth: 6.5%

Intelligent Devices - Safety & Productivity

Expected Growth: 6.5%

Software and Control - Aspen Tech

Expected Growth: 7.4%

Eliminations

Expected Growth: 4.3%

7. Detailed Products

Automation Solutions

Commercial and Residential Solutions

Network Power

Process Management

Climate Technologies

8. Emerson Electric Co.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Emerson Electric Co. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.e Scoring ^Insights

12.f DCF ^BETA