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Emerson (EMR) Beats on Q3 Earnings, Revises 2023 View
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Emerson Electric Co. (EMR - Free Report) reported third-quarter fiscal 2023 (ended Jun 30, 2023) adjusted earnings of $1.29 per share, which beat the Zacks Consensus Estimate of adjusted earnings of $1.09 per share. The bottom line declined 6.5% in the reported quarter.
Emerson’s net sales of $3,946 million beat the consensus estimate of $3,886 million. The top line increased 14% year over year driven by solid segmental performance. The underlying sales were up 14% as well.
Segmental Details
Effective from the fiscal first quarter of 2023, the company started reporting under two segments, namely Intelligent Devices and Software and Control Automation Solutions.
The Intelligent Devices segments’ net sales came in at $2,979 million, increasing 11% year over year. Our estimate for segmental revenues was $2,966.2 million. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity.
Final Control’s revenues increased to $1,035 million from $905 million in the fiscal third quarter 2023. Measurement & Analytical generated revenues of $913 million, up from $788 million reported in the year-ago period. Discrete Automation’s revenues totaled $668 million, compared with $633 million reported in the year-ago quarter. Safety & Productivity’s revenues increased to $363 million in the fiscal third quarter of 2023 from $360 million reported in the year-ago quarter.
The Software and Control Automation Solutions segment generated net sales of $983 million in the fiscal third quarter, up 22% year over year. Our estimate for segmental revenues was $920.2 million. The segment consists of two subgroups, namely Control Systems & Software, and AspenTech.
Control Systems & Software reported revenues of $663 million, compared with $568 million reported in the year-ago quarter. AspenTech generated net sales of $320 million, up 34% year over year.
Margin Details
In the quarter under review, Emerson's cost of sales increased 3.9% year over year to $1,952 million. The pretax earnings margin in the quarter was 19.3%, compared with 10.9% in the year-ago period. Adjusted EBITA margin came in at 26%, compared with 23.1% in the year-ago quarter. Selling, general and administrative expenses increased 16.6% to $1,042 million.
Balance Sheet and Cash Flow
Exiting third-quarter fiscal 2023, Emerson had cash and cash equivalents of $9,957 million, compared with $2,529 million in the year-ago quarter. Long-term debt was $8,367 million, compared with $7,642 million in the year-ago period. In the first nine months of fiscal 2023, the company repaid debts of $744 million.
In the same time period, the company generated net cash of $1,280 million from operating activities, reflecting a decrease of 24.9% from the year-ago period. Capital expenditure was $194 million, down from $199 million in the year-ago period.
The company paid out dividends of $900 million and repurchased common stocks worth $2000 million in the same time period.
Fiscal 2023 Outlook
The company has revised its fiscal 2023 outlook for continuing operations. Emerson anticipates net sales growth of approximately 10.5% year over year in fiscal 2023, compared with 9-10.5% predicted earlier. Underlying sales are expected to rise approximately 10% in the year, compared with 8.5-10% predicted before.
EMR anticipates earnings per share of $3.54-$3.59 for fiscal 2023, compared with $3.58-$3.68 expected earlier. Adjusted earnings per share is estimated to be $4.40–$4.45, compared with $4.15–$4.25 predicted before. The Zacks Consensus Estimate for the same stands at $4.21.
Zacks Rank & Other Stocks to Consider
EMR currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
GEF delivered a trailing four-quarter earnings surprise of 7.7%, on average. GEF’s earnings estimates have increased 13.4% for fiscal 2023 in the past 60 days. Its shares have risen 8% in the past year.
Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank of 2. CAT’s earnings surprise in the last four quarters was 14.3%, on average.
In the past 60 days, estimates for Caterpillar’s earnings have increased 1.4% for 2023. The stock has gained 57.9% in the past year.
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Emerson (EMR) Beats on Q3 Earnings, Revises 2023 View
Emerson Electric Co. (EMR - Free Report) reported third-quarter fiscal 2023 (ended Jun 30, 2023) adjusted earnings of $1.29 per share, which beat the Zacks Consensus Estimate of adjusted earnings of $1.09 per share. The bottom line declined 6.5% in the reported quarter.
Emerson’s net sales of $3,946 million beat the consensus estimate of $3,886 million. The top line increased 14% year over year driven by solid segmental performance. The underlying sales were up 14% as well.
Segmental Details
Effective from the fiscal first quarter of 2023, the company started reporting under two segments, namely Intelligent Devices and Software and Control Automation Solutions.
The Intelligent Devices segments’ net sales came in at $2,979 million, increasing 11% year over year. Our estimate for segmental revenues was $2,966.2 million. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity.
Final Control’s revenues increased to $1,035 million from $905 million in the fiscal third quarter 2023. Measurement & Analytical generated revenues of $913 million, up from $788 million reported in the year-ago period. Discrete Automation’s revenues totaled $668 million, compared with $633 million reported in the year-ago quarter. Safety & Productivity’s revenues increased to $363 million in the fiscal third quarter of 2023 from $360 million reported in the year-ago quarter.
The Software and Control Automation Solutions segment generated net sales of $983 million in the fiscal third quarter, up 22% year over year. Our estimate for segmental revenues was $920.2 million. The segment consists of two subgroups, namely Control Systems & Software, and AspenTech.
Control Systems & Software reported revenues of $663 million, compared with $568 million reported in the year-ago quarter. AspenTech generated net sales of $320 million, up 34% year over year.
Margin Details
In the quarter under review, Emerson's cost of sales increased 3.9% year over year to $1,952 million. The pretax earnings margin in the quarter was 19.3%, compared with 10.9% in the year-ago period. Adjusted EBITA margin came in at 26%, compared with 23.1% in the year-ago quarter. Selling, general and administrative expenses increased 16.6% to $1,042 million.
Balance Sheet and Cash Flow
Exiting third-quarter fiscal 2023, Emerson had cash and cash equivalents of $9,957 million, compared with $2,529 million in the year-ago quarter. Long-term debt was $8,367 million, compared with $7,642 million in the year-ago period. In the first nine months of fiscal 2023, the company repaid debts of $744 million.
In the same time period, the company generated net cash of $1,280 million from operating activities, reflecting a decrease of 24.9% from the year-ago period. Capital expenditure was $194 million, down from $199 million in the year-ago period.
The company paid out dividends of $900 million and repurchased common stocks worth $2000 million in the same time period.
Fiscal 2023 Outlook
The company has revised its fiscal 2023 outlook for continuing operations. Emerson anticipates net sales growth of approximately 10.5% year over year in fiscal 2023, compared with 9-10.5% predicted earlier. Underlying sales are expected to rise approximately 10% in the year, compared with 8.5-10% predicted before.
EMR anticipates earnings per share of $3.54-$3.59 for fiscal 2023, compared with $3.58-$3.68 expected earlier. Adjusted earnings per share is estimated to be $4.40–$4.45, compared with $4.15–$4.25 predicted before. The Zacks Consensus Estimate for the same stands at $4.21.
Zacks Rank & Other Stocks to Consider
EMR currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
GEF delivered a trailing four-quarter earnings surprise of 7.7%, on average. GEF’s earnings estimates have increased 13.4% for fiscal 2023 in the past 60 days. Its shares have risen 8% in the past year.
Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank of 2. CAT’s earnings surprise in the last four quarters was 14.3%, on average.
In the past 60 days, estimates for Caterpillar’s earnings have increased 1.4% for 2023. The stock has gained 57.9% in the past year.