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Emerson (EMR) to Report Q1 Earnings: What's in the Cards?

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Emerson Electric Co. (EMR - Free Report) is set to release first-quarter fiscal 2021 (ended December 2020) results on Feb 2, before market open.

Notably, the company’s earnings beat estimates thrice in the last four quarters and met once, the positive earnings surprise being 16.01%, on average. In the last reported quarter, Emerson’s earnings of $1.10 per share beat the Zacks Consensus Estimate of 95 cents by 15.79%.

In the past three months, the company’s shares have gained 25.1% compared with the industry’s rise of 34.1%.

Factors at Play

Emerson is expected to have benefited from strength across its medical, life science, food and beverage, and power end markets in first-quarter fiscal 2021. Also, robust backlog level, particularly at the company’s Automation Solutions segment, is likely to have been beneficial in the quarter.

Moreover, the company’s acquired assets are likely to have augmented its first-quarter fiscal 2021 top-line performance. Notably, the company’s acquisitions of American Governor Company (April 2020), Open Systems International (October 2020) and Progea Group (October 2020) have strengthened its product offerings, which might get reflected in the fiscal-first quarter results.

In addition, its focus on operational efficacy and cost-control measures are likely to have supported its margins and profitability in the fiscal first quarter.

However, overall challenged demand environment due to the coronavirus outbreak-led issues, along with weakness in the process and discrete end markets, is likely to have affected its top line in the to-be-reported quarter. For the fiscal first-quarter, the company anticipates an overall organic sales decline of 6-7% on a year-over-year basis.

Further, given Emerson’s extensive geographic presence, its operations are subject to global economic, political risks and forex woes. A stronger U.S. dollar might have hurt the company's overseas business in first-quarter fiscal 2021.

The Zacks Consensus Estimate for Automation Solutions’ revenues for the fiscal first quarter is currently pegged at $2,569 million, indicating 14.5% decline from the quarter-ago reported number, and a year-over-year fall of 8.2%. The consensus estimate for revenues from the Commercial and Residential Solutions segment is pegged at $1,394 million, indicating a sequential decrease of 10.4% but year-over-year growth of 4.2%.

Notably, the consensus estimate for the company’s fiscal first quarter total revenues is currently pegged at $3,955 million, suggesting 4.7% decrease from the year-ago quarter’s reported number. The consensus estimate for earnings of 68 cents suggests an improvement of 1.5% on a year-over-year basis.

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

But that is not the case here as we will see below.

Earnings ESP: Emerson has an Earnings ESP of -1.47% as the Most Accurate Estimate is pegged at 67 cents, lower than the Zacks Consensus Estimate of 68 cents.

Emerson Electric Co. Price and EPS Surprise

Emerson Electric Co. Price and EPS Surprise

Emerson Electric Co. price-eps-surprise | Emerson Electric Co. Quote

Zacks Rank: The company carries a Zacks Rank #2.

Key Picks

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Axon Enterprise, Inc (AXON - Free Report) has an Earnings ESP of +0.93% and a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kennametal Inc. (KMT - Free Report) has an Earnings ESP of +30.00% and a Zacks Rank of 2.

Eaton Corporation, plc (ETN - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank #3.

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