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Why Is Emerson Electric (EMR) Up 4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Emerson Electric (EMR - Free Report) . Shares have added about 4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Emerson Electric due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Emerson Electric Q2 Earnings & Revenues Beat Estimates
Emerson Electric’s second-quarter fiscal 2021 (ended Mar 31, 2021) adjusted earnings of 97 cents per share beat the Zacks Consensus Estimate of 90 cents. On a year-over-year basis, the bottom line improved 9%.
Inside the Headlines
Emerson’s net sales were $4,431 million in the quarter, reflecting an increase of 6% from the year-ago quarter. Underlying sales were up 2%, while acquired assets and currency translation had 1% and 3% of positive impacts on sales, respectively. Also, the top line beat the Zacks Consensus Estimate of $4,358 million.
The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal second-quarter segmental results are briefly discussed below:
Automation Solutions’ net sales were $2,793 million, increasing 3% year over year. Underlying sales of the segment declined 2%. Commercial & Residential Solutions generated net sales of $1,645 million in the fiscal second quarter, up 13% year over year. Underlying sales were up 11%. Under the segment, Climate Technologies’ sales increased 13.1% to $1,160 million, and that from Tools & Home Products jumped 12.3% to $485 million.
Gross Margin
In the quarter under review, Emerson's cost of sales increased 6.5% year over year to $2,569 million. It represented 58% of net sales compared with 57.9% in the year-ago quarter. Gross margin was 42%, down 10 basis points. Selling, general and administrative (SG&A) expenses increased 7.2% to $1,054 million. As a percentage of sales, SG&A expenses were 23.8% compared with 23.6% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting second-quarter fiscal 2021, Emerson had cash and cash equivalents of $2,342 million, down from $2,583 million at the year-ago quarter. Long-term debt balance increased 47% to $5,823 million. During the first six months of fiscal 2021, the company repaid debts of $301 million.
In the first half of fiscal 2021, it generated net cash of $1,615 million from operating activities, reflecting an increase of 59.6% from the year ago period. Capital expenditure was $222 million, down from $225 million.
During the first six months of fiscal 2021, the company paid out dividends amounting to $606 million and repurchased shares worth $78 million.
Outlook
For fiscal 2021 (ending September 2021), it anticipates net sales growth of 6-9%. Underlying sales are expected to grow in the range of 3-6%.
Adjusted earnings per share are predicted to be $3.90 for fiscal 2021.
Emerson expects Automation Solutions’ net sales to grow in the range of 3-5%, while Commercial & Residential Solutions’ net sales are projected to increase 14-16%.
Notably, the company anticipates continued improvement in the demand environment in the fiscal third quarter and ahead.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 7.34% due to these changes.
VGM Scores
Currently, Emerson Electric has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Emerson Electric has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Emerson Electric (EMR) Up 4% Since Last Earnings Report?
A month has gone by since the last earnings report for Emerson Electric (EMR - Free Report) . Shares have added about 4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Emerson Electric due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Emerson Electric Q2 Earnings & Revenues Beat Estimates
Emerson Electric’s second-quarter fiscal 2021 (ended Mar 31, 2021) adjusted earnings of 97 cents per share beat the Zacks Consensus Estimate of 90 cents. On a year-over-year basis, the bottom line improved 9%.
Inside the Headlines
Emerson’s net sales were $4,431 million in the quarter, reflecting an increase of 6% from the year-ago quarter. Underlying sales were up 2%, while acquired assets and currency translation had 1% and 3% of positive impacts on sales, respectively. Also, the top line beat the Zacks Consensus Estimate of $4,358 million.
The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal second-quarter segmental results are briefly discussed below:
Automation Solutions’ net sales were $2,793 million, increasing 3% year over year. Underlying sales of the segment declined 2%. Commercial & Residential Solutions generated net sales of $1,645 million in the fiscal second quarter, up 13% year over year. Underlying sales were up 11%. Under the segment, Climate Technologies’ sales increased 13.1% to $1,160 million, and that from Tools & Home Products jumped 12.3% to $485 million.
Gross Margin
In the quarter under review, Emerson's cost of sales increased 6.5% year over year to $2,569 million. It represented 58% of net sales compared with 57.9% in the year-ago quarter. Gross margin was 42%, down 10 basis points. Selling, general and administrative (SG&A) expenses increased 7.2% to $1,054 million. As a percentage of sales, SG&A expenses were 23.8% compared with 23.6% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting second-quarter fiscal 2021, Emerson had cash and cash equivalents of $2,342 million, down from $2,583 million at the year-ago quarter. Long-term debt balance increased 47% to $5,823 million. During the first six months of fiscal 2021, the company repaid debts of $301 million.
In the first half of fiscal 2021, it generated net cash of $1,615 million from operating activities, reflecting an increase of 59.6% from the year ago period. Capital expenditure was $222 million, down from $225 million.
During the first six months of fiscal 2021, the company paid out dividends amounting to $606 million and repurchased shares worth $78 million.
Outlook
For fiscal 2021 (ending September 2021), it anticipates net sales growth of 6-9%. Underlying sales are expected to grow in the range of 3-6%.
Adjusted earnings per share are predicted to be $3.90 for fiscal 2021.
Emerson expects Automation Solutions’ net sales to grow in the range of 3-5%, while Commercial & Residential Solutions’ net sales are projected to increase 14-16%.
Notably, the company anticipates continued improvement in the demand environment in the fiscal third quarter and ahead.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 7.34% due to these changes.
VGM Scores
Currently, Emerson Electric has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Emerson Electric has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.