It has been about a month since the last earnings report for Emerson Electric (EMR Quick QuoteEMR - Free Report) . Shares have lost about 8.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Emerson Electric due for a breakout? 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 Q1 Earnings Top Estimates, Software and Control Sales Rise

Emerson reported first-quarter fiscal 2025 (ended Dec. 31, 2024) adjusted earnings of $1.38 per share, which beat the Zacks Consensus Estimate of $1.28. The bottom line increased 13.1% year over year.

Emerson’s net sales of $4.18 billion missed the consensus estimate of $4.21 billion. The top line increased 1% year over year, driven by the solid performance of both its operating segments. The company’s underlying sales were up 2% year over year.

How Emerson’s Business Segments Performed

Effective from the first quarter of fiscal 2023, the company started reporting under two segments, namely Intelligent Devices and Software & Control.

The Intelligent Devices segment’s net sales were $2.84 billion, up 0.7% year over year. Our estimate was $2.88 billion. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity.

Final Control’s sales increased 3.8% year over year to $976 million. Measurement & Analytical generated sales of $975 million, up 3% year over year. Discrete Automation’s sales totaled $580 million, reflecting a decline of 5.4% on a year-over-year basis. Safety & Productivity’s sales decreased 3.1% year over year to $312 million.

The Software and Control Automation Solutions segment generated net sales of $1.35 billion, up 2.9% year over year. Our estimate was $1.34 billion. The segment consists of three subgroups, namely Control Systems & Software, AspenTech and Test & Measurement.

Control Systems & Software reported sales of $690 million, reflecting an increase of 2.2% year over year. AspenTech generated net sales of $303 million, up 17.9% year over year. Test & Measurement sales were $359 million, declining 6% year over year.

Emerson’s Margin Details

The cost of sales decreased 11.9% year over year to $1.9 billion. The pretax earnings margin was 18.6% compared with 4.2% in the year-ago period. Adjusted EBITA margin was 28% compared with 24.6% in the year-earlier quarter. Selling, general and administrative expenses declined 4.2% year over year to $1.2 billion.

Balance Sheet & Cash Flow

Exiting the fiscal first quarter, Emerson had cash and cash equivalents of $2.8 billion compared with $3.6 billion at the end of fiscal 2024 (ended September 2024). Long-term debt was $6.6 billion compared with $7.2 billion at the end of fiscal 2024. In the first three months of fiscal 2025, the company made a payment of long-term debt worth $2 million.

In the same period, the company generated net cash of $777 million from operating activities, up 87.2% year over year. Capital expenditure was $83 million, up from $77 million in the year-ago period. Emerson paid out dividends of $301 million and repurchased shares worth $899 million in the same period.

Emerson’s Q2 Fiscal 2025 Outlook

For the second quarter of fiscal 2025 (ending March 2025), Emerson anticipates year-over-year net sales growth to be in the band of (0.5)-0.5% and underlying sales growth to be in the range of 1-2%.

Emerson anticipates earnings per share to be in the range of $1.01-$1.05. Adjusted earnings per share are anticipated to be in the band of $1.38-$1.42.

FY25 Outlook

Emerson currently anticipates net sales growth of 1.5-3.5% from the year-earlier level compared with 3.5-5.5% expected earlier. Underlying sales are expected to rise in the range of 3-5%, in line with the previous projection.

Emerson continues to project earnings per share to be in the range of $4.42-$4.62. Adjusted earnings per share are estimated to be in the range of $5.85-$6.05, unchanged from its earlier estimate. The company expects operating cash flow to be in the band of $3.6-$3.7 billion. Free cash flow is estimated to be in the range of $3.2-$3.3 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Emerson Electric has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Emerson Electric has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Emerson Electric belongs to the Zacks Manufacturing - Electronics industry. Another stock from the same industry, A.O. Smith (AOS Quick QuoteAOS - Free Report) , has gained 4.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2024.

A.O. Smith reported revenues of $912.4 million in the last reported quarter, representing a year-over-year change of -7.7%. EPS of $0.85 for the same period compares with $0.97 a year ago.

A.O. Smith is expected to post earnings of $0.90 per share for the current quarter, representing a year-over-year change of -10%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.6%.

A.O. Smith has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.