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Emerson Electric Co EMR

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Strong Fiscal Second Quarter Performance Prompts Us to Raise Emerson’s Fair Value Estimate

Joshua Aguilar Equity Analyst

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.

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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 Mar 31, 2021
Fiscal Year End Sep 30, 2021
Stock Type Cyclical
Employees 83,500

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