Analyst Note| Joshua Aguilar |
Wide-moat rated Emerson Electric posted solid fiscal second-quarter 2021 results. Second-quarter net sales rose to $4.4 billion, up 6% year over year, or up nearly 2% year over year on an underlying basis. Second-quarter GAAP EPS, furthermore, rose by 11% year on year to $0.93, also ahead of management's guidance. Finally, free cash flow rose 48% year over year--good for a conversion of 125% and free cash flow margin of 16%. On the heels of this outperformance, and despite considerable supply chain and raw material headwinds reverberating throughout the sector, management raised its reported sales growth guide by 1.5 percentage points to 7.5% at the midpoint and its adjusted EPS guide by 20 cents at the midpoint to $3.90. Furthermore, it also raised its free cash flow guide to $3.3 billion from $3.15 billion previously.