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Here's Why Investing in Emerson (EMR) Stock Makes Sense Now
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Emerson Electric Co. (EMR - Free Report) is benefiting from healthy demand across most end markets and accretive acquisitions. The company’s shareholder-friendly policies are encouraging.
Let’s delve into the factors that make this Zacks Rank #1 (Strong Buy) company a smart investment choice at the moment.
End-Market Strength: Strong demand in the process and hybrid markets is boosting EMR’s underlying orders. The company anticipates sales in the process and hybrid end markets to increase in mid to high single-digits in fiscal 2024 (ending September 2024), driven by energy security, sustainability and decarbonization, nearshoring and digital transformation. Also, a robust demand environment and improving supply chains are supporting underlying sales growth.
Given the strength across its end markets, Emerson has provided a bullish forecast for fiscal 2024. The company expects net sales to increase 14-17.5% year over year in the first quarter of fiscal 2024 (ending December 2023). Underlying sales are expected to increase 6.5-8.5%. For fiscal 2024, the company expects net sales to increase 13-15.5% year over year. Underlying sales are anticipated to increase 4-6% in the same period.
Business Strength: Solid momentum in the measurement, analytical and final control businesses due to strong demand in the hybrid and process end markets is aiding the Intelligent Devices business unit. Revenues from the unit increased 7% year over year in fiscal 2023 (ended September 2023). Improved supply chains, easier availability of electronic components and strong backlogs are driving the growth of the Software and Control business group. Revenues from the unit jumped 20% year over year in fiscal 2023.
Expansion Efforts: The company’s expansion initiative is expected to drive its growth. In the fourth quarter of fiscal 2023, Emerson acquired Afag and Flexim. The acquisition of Afag expands Emerson’s capabilities in factory automation, helping the company expand into lucrative end markets, which include battery manufacturing, automotive, packaging, medical, life sciences and electronics. The acquisition of Flexim adds to EMR’s existing flow measurement positions in coriolis, differential pressure, magmeter and vortex flow measurement and expands its automation portfolio and measurement capabilities.
Also, in October 2023, Emerson completed the acquisition of National Instruments for $8.2 billion. The acquisition is in sync with the company’s focus on global automation to drive growth and profitability. The buyout strengthens EMR’s global automation foothold, helping the company expand into high-growth end markets, including semiconductor and electronics, transportation and electric vehicles and aerospace and defense.
Rewards to Shareholders: The company’s measures to reward its shareholders through dividend payments are noteworthy. In fiscal 2023, the company paid dividends of $1.2 billion. In November 2023, the company hiked its dividend by 1%. EMR plans to repurchase shares worth $500 million in fiscal 2024.
Northward Estimate Revision: The Zacks Consensus Estimate for EMR’s fiscal 2024 earnings has been revised 6.2% upward in the past 60 days.
FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has increased 1.0%. The stock has risen 35.4% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.8% in the past 60 days. Shares of Applied Industrial have jumped 37.4% in the past year.
A. O. Smith Corporation (AOS - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 14%.
In the past 60 days, the Zacks Consensus Estimate for A. O. Smith’s 2023 earnings has improved 1.3%. The stock has risen 42.4% in the past year.
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Here's Why Investing in Emerson (EMR) Stock Makes Sense Now
Emerson Electric Co. (EMR - Free Report) is benefiting from healthy demand across most end markets and accretive acquisitions. The company’s shareholder-friendly policies are encouraging.
Let’s delve into the factors that make this Zacks Rank #1 (Strong Buy) company a smart investment choice at the moment.
End-Market Strength: Strong demand in the process and hybrid markets is boosting EMR’s underlying orders. The company anticipates sales in the process and hybrid end markets to increase in mid to high single-digits in fiscal 2024 (ending September 2024), driven by energy security, sustainability and decarbonization, nearshoring and digital transformation. Also, a robust demand environment and improving supply chains are supporting underlying sales growth.
Given the strength across its end markets, Emerson has provided a bullish forecast for fiscal 2024. The company expects net sales to increase 14-17.5% year over year in the first quarter of fiscal 2024 (ending December 2023). Underlying sales are expected to increase 6.5-8.5%. For fiscal 2024, the company expects net sales to increase 13-15.5% year over year. Underlying sales are anticipated to increase 4-6% in the same period.
Business Strength: Solid momentum in the measurement, analytical and final control businesses due to strong demand in the hybrid and process end markets is aiding the Intelligent Devices business unit. Revenues from the unit increased 7% year over year in fiscal 2023 (ended September 2023). Improved supply chains, easier availability of electronic components and strong backlogs are driving the growth of the Software and Control business group. Revenues from the unit jumped 20% year over year in fiscal 2023.
Expansion Efforts: The company’s expansion initiative is expected to drive its growth. In the fourth quarter of fiscal 2023, Emerson acquired Afag and Flexim. The acquisition of Afag expands Emerson’s capabilities in factory automation, helping the company expand into lucrative end markets, which include battery manufacturing, automotive, packaging, medical, life sciences and electronics. The acquisition of Flexim adds to EMR’s existing flow measurement positions in coriolis, differential pressure, magmeter and vortex flow measurement and expands its automation portfolio and measurement capabilities.
Also, in October 2023, Emerson completed the acquisition of National Instruments for $8.2 billion. The acquisition is in sync with the company’s focus on global automation to drive growth and profitability. The buyout strengthens EMR’s global automation foothold, helping the company expand into high-growth end markets, including semiconductor and electronics, transportation and electric vehicles and aerospace and defense.
Rewards to Shareholders: The company’s measures to reward its shareholders through dividend payments are noteworthy. In fiscal 2023, the company paid dividends of $1.2 billion. In November 2023, the company hiked its dividend by 1%. EMR plans to repurchase shares worth $500 million in fiscal 2024.
Northward Estimate Revision: The Zacks Consensus Estimate for EMR’s fiscal 2024 earnings has been revised 6.2% upward in the past 60 days.
Emerson Electric Co. Price and Consensus
Emerson Electric Co. price-consensus-chart | Emerson Electric Co. Quote
Other Stocks to Consider
Some other top-ranked companies from the Industrial Products sector are discussed below:
Flowserve Corporation (FLS - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has increased 1.0%. The stock has risen 35.4% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.8% in the past 60 days. Shares of Applied Industrial have jumped 37.4% in the past year.
A. O. Smith Corporation (AOS - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 14%.
In the past 60 days, the Zacks Consensus Estimate for A. O. Smith’s 2023 earnings has improved 1.3%. The stock has risen 42.4% in the past year.