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EMR Q4 Earnings Beat on Software & Systems Strength
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Key Takeaways
Emerson's Q4 adjusted EPS rose 14.8% to $1.86, while revenues increased 7% to $5.20 billion.
Software & Systems orders grew 18%, while Intelligent Devices orders advanced 13%, supporting strong demand.
Fiscal 2027 adjusted EPS is projected at $7.25, with $3.8-$3.9 billion in free cash flow.
Emerson Electric Co. (EMR - Free Report) reported adjusted earnings of $1.86 per share for the fourth quarter of fiscal 2026 (ended September 2026), up 14.8% year over year. The figure beat the Zacks Consensus Estimate of $1.85 by 0.5%, aided by higher volumes, favorable segment mix and cost reductions.
Revenues increased 7% year over year to $5.20 billion and surpassed the consensus estimate of $5.12 billion by 1.6%. Underlying sales rose 7%, while underlying orders advanced 14%. Backlog, excluding AspenTech, increased 11% to $8.2 billion.
EMR's Orders and Regional Trends
Demand remained strong across Emerson's business groups, led by Software & Systems and Intelligent Devices, which recorded underlying order growth of 18% and 13%, respectively. Longer-cycle project activity benefited from strength in power, liquefied natural gas (LNG) and aerospace & defense markets.
The Americas registered 9% underlying sales growth, supported by an 11% increase in the United States. Asia, the Middle East and Africa recorded 7% growth, with the Middle East and Africa advancing 19%. Europe increased 1%, while China remained weak. The company's project funnel reached $13 billion, increasing $600 million sequentially.
Emerson's Software & Systems Momentum
Software & Systems segment's revenues increased 14% year over year to $1.71 billion, exceeding management's prior underlying growth expectation of approximately 10%. The group's adjusted EBITA margin expanded to 32.3% from 27.4% in the year-ago quarter.
Within the segment, Test & Measurement revenues climbed 14% to $465 million, with underlying growth of 15%. Control Systems & Software revenues advanced 14% to $1.25 billion. Performance benefited from strength in power, LNG and semiconductor markets. Annual contract value increased 10.1% year over year to approximately $1.7 billion.
EMR's Intelligent Devices and Safety & Productivity segment's Results
Intelligent Devices generated revenues of $2.92 billion, up 5% on a reported basis and 4% on an underlying basis. The adjusted EBITA margin declined to 28.4% from 28.5% in the prior-year quarter. Growth was supported by power, LNG, and upstream and midstream gas markets, along with strength in North America and the Middle East.
Within the segment, Sensors revenues increased 4% to $1.19 billion, while Final Control revenues rose 5% to $1.73 billion. Safety & Productivity revenues increased 2% to $573 million. Its adjusted EBITA margin improved to 22.9% from 22.6%. Strength in electrical products and U.S. industrial activity was partly offset by continued weakness in Europe.
Emerson Electric Co. Price, Consensus and EPS Surprise
The cost of sales increased 5.4% to $2.46 billion from the year-ago quarter. Selling, general and administrative expenses rose 4.7% year over year to $1.39 billion. Other deductions, net, declined to $274 million from $338 million.
Pretax earnings increased to $997 million from $760 million, while the pretax margin expanded 360 basis points to 19.2%. Adjusted segment EBITA rose to $1.51 billion from $1.33 billion. The corresponding margin improved 160 basis points to 29.1%, as favorable volume, segment mix and cost reductions more than offset inflationary pressures.
EMR's Cash Flow and Balance Sheet Position
Exiting fiscal 2026, Emerson had cash and cash equivalents of $1.81 billion compared with $1.54 billion at the end of fiscal 2025. Long-term debt decreased to $7.51 billion from $8.32 billion over the same period.
Operating cash flow increased 6.3% year over year to $1.08 billion in the fourth quarter. Free cash flow rose 8.7% to $916 million. For fiscal 2026, free cash flow increased 8.9% to $3.54 billion, with the margin expanding 60 basis points to 18.6%. Emerson paid dividends of $1.24 billion and repurchased shares worth $1 billion during the fiscal year.
Emerson Provides Fiscal 2027 Outlook
Emerson expects fiscal 2027 net and underlying sales growth of approximately 5%. Adjusted earnings are projected at approximately $7.25 per share, while the adjusted segment EBITA margin is expected to reach roughly 29%. Free cash flow is anticipated between $3.8 billion and $3.9 billion.
For the first quarter of fiscal 2027, management expects net and underlying sales growth of approximately 5%. Adjusted earnings are projected between $1.58 and $1.62 per share, with an adjusted segment EBITA margin of approximately 28%.
The company plans to return approximately $3.8 billion to shareholders through $2.5 billion in share repurchases and $1.3 billion in dividends during fiscal 2027. Emerson also announced a 7% increase in its quarterly dividend to $0.595 per share.
EMR’s Zacks Rank
The company currently carries a Zacks Rank #3 (Hold).
In the third quarter of 2026, Graco Inc. (GGG - Free Report) came out with quarterly earnings of $0.81 per share, missing the Zacks Consensus Estimate of $0.82 per share. This compares with earnings of $0.73 per share a year ago.
Graco reported revenues of $586.39 million in the quarter ended September 2026, missing the Zacks Consensus Estimate by 0.58%. This compares with year-ago revenues of $543.36 million.
Dover Corporation (DOV - Free Report) has reported third-quarter 2026 adjusted earnings of $2.88 per share, rising 10% year over year and beating the Zacks Consensus Estimate of $2.83 by 1.77%. The improvement reflected broad-based demand, higher revenues and operational execution.
Revenues increased 7.5% year over year to $2.23 billion, beating the Zacks Consensus Estimate of $2.20 billion by 1.47%. Organic revenues grew 7.1%. Our model expected organic revenues to rise 4%.
Allegion plc (ALLE - Free Report) reported third-quarter 2026 adjusted earnings of $2.60 per share, up 13% year over year. The figure beat the Zacks Consensus Estimate of $2.49 by 4.4%, supported by strong organic growth and margin expansion.
Revenues increased 9.6% year over year to $1.17 billion, beating the Zacks Consensus Estimate of $1.13 billion by 3.4%. Organic revenues grew 7.2%, driven by strength in the Americas non-residential business, volume growth and price realization.
View the Zacks #1 Rank List
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EMR Q4 Earnings Beat on Software & Systems Strength
Key Takeaways
Emerson Electric Co. (EMR - Free Report) reported adjusted earnings of $1.86 per share for the fourth quarter of fiscal 2026 (ended September 2026), up 14.8% year over year. The figure beat the Zacks Consensus Estimate of $1.85 by 0.5%, aided by higher volumes, favorable segment mix and cost reductions.
Revenues increased 7% year over year to $5.20 billion and surpassed the consensus estimate of $5.12 billion by 1.6%. Underlying sales rose 7%, while underlying orders advanced 14%. Backlog, excluding AspenTech, increased 11% to $8.2 billion.
EMR's Orders and Regional Trends
Demand remained strong across Emerson's business groups, led by Software & Systems and Intelligent Devices, which recorded underlying order growth of 18% and 13%, respectively. Longer-cycle project activity benefited from strength in power, liquefied natural gas (LNG) and aerospace & defense markets.
The Americas registered 9% underlying sales growth, supported by an 11% increase in the United States. Asia, the Middle East and Africa recorded 7% growth, with the Middle East and Africa advancing 19%. Europe increased 1%, while China remained weak. The company's project funnel reached $13 billion, increasing $600 million sequentially.
Emerson's Software & Systems Momentum
Software & Systems segment's revenues increased 14% year over year to $1.71 billion, exceeding management's prior underlying growth expectation of approximately 10%. The group's adjusted EBITA margin expanded to 32.3% from 27.4% in the year-ago quarter.
Within the segment, Test & Measurement revenues climbed 14% to $465 million, with underlying growth of 15%. Control Systems & Software revenues advanced 14% to $1.25 billion. Performance benefited from strength in power, LNG and semiconductor markets. Annual contract value increased 10.1% year over year to approximately $1.7 billion.
EMR's Intelligent Devices and Safety & Productivity segment's Results
Intelligent Devices generated revenues of $2.92 billion, up 5% on a reported basis and 4% on an underlying basis. The adjusted EBITA margin declined to 28.4% from 28.5% in the prior-year quarter. Growth was supported by power, LNG, and upstream and midstream gas markets, along with strength in North America and the Middle East.
Within the segment, Sensors revenues increased 4% to $1.19 billion, while Final Control revenues rose 5% to $1.73 billion. Safety & Productivity revenues increased 2% to $573 million. Its adjusted EBITA margin improved to 22.9% from 22.6%. Strength in electrical products and U.S. industrial activity was partly offset by continued weakness in Europe.
Emerson Electric Co. Price, Consensus and EPS Surprise
Emerson Electric Co. price-consensus-eps-surprise-chart | Emerson Electric Co. Quote
Emerson's Margin and Cost Performance
The cost of sales increased 5.4% to $2.46 billion from the year-ago quarter. Selling, general and administrative expenses rose 4.7% year over year to $1.39 billion. Other deductions, net, declined to $274 million from $338 million.
Pretax earnings increased to $997 million from $760 million, while the pretax margin expanded 360 basis points to 19.2%. Adjusted segment EBITA rose to $1.51 billion from $1.33 billion. The corresponding margin improved 160 basis points to 29.1%, as favorable volume, segment mix and cost reductions more than offset inflationary pressures.
EMR's Cash Flow and Balance Sheet Position
Exiting fiscal 2026, Emerson had cash and cash equivalents of $1.81 billion compared with $1.54 billion at the end of fiscal 2025. Long-term debt decreased to $7.51 billion from $8.32 billion over the same period.
Operating cash flow increased 6.3% year over year to $1.08 billion in the fourth quarter. Free cash flow rose 8.7% to $916 million. For fiscal 2026, free cash flow increased 8.9% to $3.54 billion, with the margin expanding 60 basis points to 18.6%. Emerson paid dividends of $1.24 billion and repurchased shares worth $1 billion during the fiscal year.
Emerson Provides Fiscal 2027 Outlook
Emerson expects fiscal 2027 net and underlying sales growth of approximately 5%. Adjusted earnings are projected at approximately $7.25 per share, while the adjusted segment EBITA margin is expected to reach roughly 29%. Free cash flow is anticipated between $3.8 billion and $3.9 billion.
For the first quarter of fiscal 2027, management expects net and underlying sales growth of approximately 5%. Adjusted earnings are projected between $1.58 and $1.62 per share, with an adjusted segment EBITA margin of approximately 28%.
The company plans to return approximately $3.8 billion to shareholders through $2.5 billion in share repurchases and $1.3 billion in dividends during fiscal 2027. Emerson also announced a 7% increase in its quarterly dividend to $0.595 per share.
EMR’s Zacks Rank
The company currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
In the third quarter of 2026, Graco Inc. (GGG - Free Report) came out with quarterly earnings of $0.81 per share, missing the Zacks Consensus Estimate of $0.82 per share. This compares with earnings of $0.73 per share a year ago.
Graco reported revenues of $586.39 million in the quarter ended September 2026, missing the Zacks Consensus Estimate by 0.58%. This compares with year-ago revenues of $543.36 million.
Dover Corporation (DOV - Free Report) has reported third-quarter 2026 adjusted earnings of $2.88 per share, rising 10% year over year and beating the Zacks Consensus Estimate of $2.83 by 1.77%. The improvement reflected broad-based demand, higher revenues and operational execution.
Revenues increased 7.5% year over year to $2.23 billion, beating the Zacks Consensus Estimate of $2.20 billion by 1.47%. Organic revenues grew 7.1%. Our model expected organic revenues to rise 4%.
Allegion plc (ALLE - Free Report) reported third-quarter 2026 adjusted earnings of $2.60 per share, up 13% year over year. The figure beat the Zacks Consensus Estimate of $2.49 by 4.4%, supported by strong organic growth and margin expansion.
Revenues increased 9.6% year over year to $1.17 billion, beating the Zacks Consensus Estimate of $1.13 billion by 3.4%. Organic revenues grew 7.2%, driven by strength in the Americas non-residential business, volume growth and price realization.