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.