We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Emerson (EMR) Q3 Earnings & Revenues Top Estimates, Up Y/Y
Read MoreHide Full Article
Emerson Electric Co.’s (EMR - Free Report) third-quarter fiscal 2021 (ended Jun 30, 2021) adjusted earnings of $1.09 per share beat the Zacks Consensus Estimate of 98 cents. On a year-over-year basis, the bottom line improved 36.3%.
Inside the Headlines
Emerson’s net sales were $4,697 million in the quarter, reflecting an increase of 20% from the year-ago quarter. Underlying sales were up 15%, while acquired assets and currency translation had 1% and 4% of positive impacts on sales, respectively. The top line beat the Zacks Consensus Estimate of $4,602 million.
The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal third-quarter segmental results are briefly discussed below:
Automation Solutions’ net sales were $2,947 million, increasing 13.8% year over year. Underlying sales of the segment increased 8%. Commercial & Residential Solutions generated net sales of $1,757 million in the fiscal third quarter, up 32.4% year over year. Underlying sales were up 29%. Under the segment, Climate Technologies’ sales increased 30.7% to $1,268 million, and that from Tools & Home Products jumped 37% to $489 million.
Gross Margin
In the quarter under review, Emerson's cost of sales increased 18.2% year over year to $2,715 million. It represented 57.8% of net sales compared with 58.7% in the year-ago quarter. Gross margin was 42.2%, up 90 basis points. Selling, general and administrative (SG&A) expenses increased 14.9% to $1,073 million. As a percentage of sales, SG&A expenses were 22.8% compared with 23.9% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting third-quarter fiscal 2021, Emerson had cash and cash equivalents of $2,860 million, up from $2,342 million in the previous quarter. Long-term debt balance increased 0.2% sequentially to $5,835 million. During the first nine months of fiscal 2021, the company repaid debts of $305 million.
In the first nine months of fiscal 2021, it generated net cash of $2,720 million from operating activities, reflecting an increase of 46.7% from the year-ago period. Capital expenditure was $350 million, up from $329 million.
During the first nine months of fiscal 2021, the company paid out dividends amounting to $909 million and repurchased shares worth $268 million.
Outlook
For fiscal 2021 (ending September 2021), it anticipates net sales growth of 9-10%. Underlying sales are expected to grow in the range of 5-6%.
Adjusted earnings per share are predicted to be $4.07 for fiscal 2021.
Emerson expects Automation Solutions’ net sales to grow in the range of 5-6%, while Commercial & Residential Solutions’ net sales are projected to increase 17-18%.
The company anticipates generating operating cash flow of $3.6 billion, with free cash flow of $3 billion.
Emerson Electric Co. Price, Consensus and EPS Surprise
Image: Bigstock
Emerson (EMR) Q3 Earnings & Revenues Top Estimates, Up Y/Y
Emerson Electric Co.’s (EMR - Free Report) third-quarter fiscal 2021 (ended Jun 30, 2021) adjusted earnings of $1.09 per share beat the Zacks Consensus Estimate of 98 cents. On a year-over-year basis, the bottom line improved 36.3%.
Inside the Headlines
Emerson’s net sales were $4,697 million in the quarter, reflecting an increase of 20% from the year-ago quarter. Underlying sales were up 15%, while acquired assets and currency translation had 1% and 4% of positive impacts on sales, respectively. The top line beat the Zacks Consensus Estimate of $4,602 million.
The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal third-quarter segmental results are briefly discussed below:
Automation Solutions’ net sales were $2,947 million, increasing 13.8% year over year. Underlying sales of the segment increased 8%. Commercial & Residential Solutions generated net sales of $1,757 million in the fiscal third quarter, up 32.4% year over year. Underlying sales were up 29%. Under the segment, Climate Technologies’ sales increased 30.7% to $1,268 million, and that from Tools & Home Products jumped 37% to $489 million.
Gross Margin
In the quarter under review, Emerson's cost of sales increased 18.2% year over year to $2,715 million. It represented 57.8% of net sales compared with 58.7% in the year-ago quarter. Gross margin was 42.2%, up 90 basis points. Selling, general and administrative (SG&A) expenses increased 14.9% to $1,073 million. As a percentage of sales, SG&A expenses were 22.8% compared with 23.9% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting third-quarter fiscal 2021, Emerson had cash and cash equivalents of $2,860 million, up from $2,342 million in the previous quarter. Long-term debt balance increased 0.2% sequentially to $5,835 million. During the first nine months of fiscal 2021, the company repaid debts of $305 million.
In the first nine months of fiscal 2021, it generated net cash of $2,720 million from operating activities, reflecting an increase of 46.7% from the year-ago period. Capital expenditure was $350 million, up from $329 million.
During the first nine months of fiscal 2021, the company paid out dividends amounting to $909 million and repurchased shares worth $268 million.
Outlook
For fiscal 2021 (ending September 2021), it anticipates net sales growth of 9-10%. Underlying sales are expected to grow in the range of 5-6%.
Adjusted earnings per share are predicted to be $4.07 for fiscal 2021.
Emerson expects Automation Solutions’ net sales to grow in the range of 5-6%, while Commercial & Residential Solutions’ net sales are projected to increase 17-18%.
The company anticipates generating operating cash flow of $3.6 billion, with free cash flow of $3 billion.
Emerson Electric Co. Price, Consensus and EPS Surprise
Emerson Electric Co. price-consensus-eps-surprise-chart | Emerson Electric Co. Quote
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks are AZZ Inc. (AZZ - Free Report) , Brady Corporation (BRC - Free Report) and Franklin Electric Co., Inc. (FELE - Free Report) . While AZZ currently sports a Zacks Rank #1 (Strong Buy), Brady and Franklin Electric carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
AZZ delivered an earnings surprise of 21.24%, on average, in the trailing four quarters.
Brady delivered an earnings surprise of 1.58%, on average, in the trailing four quarters.
Franklin Electric delivered an earnings surprise of 21.08%, on average, in the trailing four quarters.