Emerson Electric Co. (EMR - Free Report) has reported better-than-expected first-quarter fiscal 2022 (ended Dec 31, 2021) results, with earnings and sales surpassing estimates by 6.1% and 0.1%, respectively.
The company’s adjusted earnings came in at $1.05 per share, beating the Zacks Consensus Estimate of 99 cents. On a year-over-year basis, the bottom line improved 13%.
Inside the Headlines
Emerson’s net sales were $4,473 million in the quarter, reflecting an increase of 8% from the year-ago quarter. Underlying sales were up 8%. The top line beat the Zacks Consensus Estimate of $4,470 million.
The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal first-quarter segmental results are briefly discussed below:
Automation Solutions’ net sales were $2,805 million, increasing 4.2% year over year. Underlying sales of the segment increased 5%. Commercial & Residential Solutions generated net sales of $1,671 million in the fiscal first quarter, up 13.2% year over year. Underlying sales were up 13%. Under the segment, Climate Technologies’ sales increased 12.8% to $1,163 million and that from Tools & Home Products jumped 14.2% to $508 million.
Margin Details
In the quarter under review, Emerson's cost of sales increased 8.7% year over year to $2,651 million. It represented 59.3% of net sales compared with 58.6% in the year-ago quarter. Pretax margin in the quarter was 26.3%, up 1,280 basis points (bps). Adjusted EBITA margin came in at 19.6%, up 140 bps. Selling, general and administrative (SG&A) expenses increased 1.3% to $1,011 million. As a percentage of sales, SG&A expenses were 22.6% compared with 24% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting first-quarter fiscal 2022, Emerson had cash and cash equivalents of $4,726 million, up from $2,354 million in the previous quarter. Long-term debt balance increased 50.6% sequentially to $8,722 million. During the first three months of fiscal 2022, the company repaid debts of $501 million.
In the first three months of fiscal 2022, it generated net cash of $523 million from operating activities, reflecting a decrease of 35.3% from the year-ago period. Capital expenditure was $116 million, down from $122 million.
During the first three months of fiscal 2022, the company paid out dividends amounting to $307 million and repurchased shares worth $253 million.
Outlook
For fiscal 2022 (ending September 2022), it anticipates net sales growth of 6-8%, higher than 5-7% increase predicted earlier. Underlying sales are expected to grow in the range of 7-9%, compared with 6-8% growth projected earlier.
For fiscal 2022, adjusted earnings per share are predicted to lie in the range of $4.90-$5.05 compared with $4.82-$4.97 estimated previously.
For the fiscal year, Emerson expects Automation Solutions’ net sales to grow in the range of 5-7% while Commercial & Residential Solutions’ net sales are projected to increase 8-10%.
The company anticipates generating operating cash flow of $3.8 billion, with free cash flow of $3.1 billion. It expects to repurchase $250-$500 million worth of shares and pay dividends totaling $1.2 billion in fiscal 2022.
For the second quarter of fiscal 2022 (ending March 2022), it anticipates net sales growth of 4-6%. Underlying sales are expected to grow in the range of 6-8%.
For the fiscal second quarter, adjusted earnings per share are expected to lie in the range of $1.15-$1.20.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the industry are discussed below.
AZZ Inc. (AZZ - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Its earnings surprise for the last four quarters was 16.90%, on average.
AZZ’s earnings estimates increased 2.3% for fiscal 2022 (ending February 2022) and 3.7% for fiscal 2023 (ending February 2023) in the past 30 days. Its shares have lost 10% in the past three months.
Franklin Electric Co., Inc. (FELE - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 16.27%, on average.
In the past 30 days, Franklin Electric’s earnings estimates have been stable for 2021 (results are awaited) and increased 0.6% for 2022. FELE’s shares have lost 2.8% in the past three months.
SPX FLOW, Inc. (FLOW - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 40.42%, on average.
SPX FLOW’s earnings estimates have been stable for 2021 (results awaited) and increased 0.3% for 2022 in the past 30 days. FLOW’ shares have gained 10.5% in the past three months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Emerson Electric Co. (EMR - Free Report) has reported better-than-expected first-quarter fiscal 2022 (ended Dec 31, 2021) results, with earnings and sales surpassing estimates by 6.1% and 0.1%, respectively.
The company’s adjusted earnings came in at $1.05 per share, beating the Zacks Consensus Estimate of 99 cents. On a year-over-year basis, the bottom line improved 13%.
Inside the Headlines
Emerson’s net sales were $4,473 million in the quarter, reflecting an increase of 8% from the year-ago quarter. Underlying sales were up 8%. The top line beat the Zacks Consensus Estimate of $4,470 million.
The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal first-quarter segmental results are briefly discussed below:
Automation Solutions’ net sales were $2,805 million, increasing 4.2% year over year. Underlying sales of the segment increased 5%. Commercial & Residential Solutions generated net sales of $1,671 million in the fiscal first quarter, up 13.2% year over year. Underlying sales were up 13%. Under the segment, Climate Technologies’ sales increased 12.8% to $1,163 million and that from Tools & Home Products jumped 14.2% to $508 million.
Margin Details
In the quarter under review, Emerson's cost of sales increased 8.7% year over year to $2,651 million. It represented 59.3% of net sales compared with 58.6% in the year-ago quarter. Pretax margin in the quarter was 26.3%, up 1,280 basis points (bps). Adjusted EBITA margin came in at 19.6%, up 140 bps. Selling, general and administrative (SG&A) expenses increased 1.3% to $1,011 million. As a percentage of sales, SG&A expenses were 22.6% compared with 24% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting first-quarter fiscal 2022, Emerson had cash and cash equivalents of $4,726 million, up from $2,354 million in the previous quarter. Long-term debt balance increased 50.6% sequentially to $8,722 million. During the first three months of fiscal 2022, the company repaid debts of $501 million.
In the first three months of fiscal 2022, it generated net cash of $523 million from operating activities, reflecting a decrease of 35.3% from the year-ago period. Capital expenditure was $116 million, down from $122 million.
During the first three months of fiscal 2022, the company paid out dividends amounting to $307 million and repurchased shares worth $253 million.
Outlook
For fiscal 2022 (ending September 2022), it anticipates net sales growth of 6-8%, higher than 5-7% increase predicted earlier. Underlying sales are expected to grow in the range of 7-9%, compared with 6-8% growth projected earlier.
For fiscal 2022, adjusted earnings per share are predicted to lie in the range of $4.90-$5.05 compared with $4.82-$4.97 estimated previously.
For the fiscal year, Emerson expects Automation Solutions’ net sales to grow in the range of 5-7% while Commercial & Residential Solutions’ net sales are projected to increase 8-10%.
The company anticipates generating operating cash flow of $3.8 billion, with free cash flow of $3.1 billion. It expects to repurchase $250-$500 million worth of shares and pay dividends totaling $1.2 billion in fiscal 2022.
For the second quarter of fiscal 2022 (ending March 2022), it anticipates net sales growth of 4-6%. Underlying sales are expected to grow in the range of 6-8%.
For the fiscal second quarter, adjusted earnings per share are expected to lie in the range of $1.15-$1.20.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the industry are discussed below.
AZZ Inc. (AZZ - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Its earnings surprise for the last four quarters was 16.90%, on average.
AZZ’s earnings estimates increased 2.3% for fiscal 2022 (ending February 2022) and 3.7% for fiscal 2023 (ending February 2023) in the past 30 days. Its shares have lost 10% in the past three months.
Franklin Electric Co., Inc. (FELE - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 16.27%, on average.
In the past 30 days, Franklin Electric’s earnings estimates have been stable for 2021 (results are awaited) and increased 0.6% for 2022. FELE’s shares have lost 2.8% in the past three months.
SPX FLOW, Inc. (FLOW - Free Report) presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 40.42%, on average.
SPX FLOW’s earnings estimates have been stable for 2021 (results awaited) and increased 0.3% for 2022 in the past 30 days. FLOW’ shares have gained 10.5% in the past three months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on EMR - FREE
Get the latest research report on AZZ - FREE
Get the latest research report on FLOW - FREE
Get the latest research report on FELE - FREE