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Emerson Electric Co EMR

Rating as of

Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

No Surprises in Emerson’s Investor Day As Management’s Views Parallel Our Own

Joshua Aguilar Equity Analyst

Analyst Note

| Joshua Aguilar |

Nothing in wide-moat rated Emerson’s 2021 investor day alters our long-term view of the firm. We lift our fair value estimate by $1 due only to time value of money since our last update, which takes us to $90 per share from $89 previously. We’ve made no significant adjustments to our assumptions, although we incorporated both restructuring and purchase amortization adjustments in our medium-term earnings per share projections as is the current practice of the company. While the timing may vary, we see the long-term performance of the company in a similar light to management. We model a 6.3% reported top-line CAGR from 2020 to 2023, which bakes in acquisitions, adjusted EBITDA margins of greater than 24%, and adjusted EPS of $4.81. We note, however, that adjusted EPS excludes restructuring charges that are real cash charges, though Emerson has completed 80% of its planned restructuring and a majority of the carryover benefits in the hundreds of millions are yet to be realized.

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Company Profile

Business Description

Emerson Electric is a multi-industrial conglomerate that operates under two business platforms: Automation Solutions and Commercial and Residential Solutions. The latter is further subdivided into two operating segments: climate technologies, which sells HVAC and refrigeration products and services, as well as tools and home products, which sells tools and compressors, among other products and services. Commercial and residential solutions boasts several household brands, including Copeland, InSinkErator, and RIDGID. Automation solutions is most known for its process manufacturing solutions, which consists of measurement instrumentation, as well as valves and actuators, among other products and services. About half of the firm’s geographic sales take place in the United States.

Contact
8000 West Florissant Avenue, P.O. Box 4100
St. Louis, MO, 63136
T +1 314 553-2000
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Dec 31, 2020
Fiscal Year End Sep 30, 2021
Stock Type Cyclical
Employees 83,500

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