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Emerson's (EMR) Q3 Earnings Beat, Revenues Miss Estimates

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Emerson Electric Co. (EMR - Free Report) reported mixed results for third-quarter fiscal 2018 (Ended June 2018).

Earnings/Revenues

Adjusted earnings came in at 88 cents per share, higher than the year-ago tally of 68 cents per share. The bottom-line figure also surpassed the Zacks Consensus Estimate of 86 cents.

Revenues in the reported quarter came in at $4,456 million, up from the year-ago tally of $4,039 million. This upside stemmed from elevated demand from mature and emerging markets, acquisition benefits and favorable foreign currency-translation impact. However, the top-line figure missed the Zacks Consensus Estimate of $4,479 million.

Segmental Break-Up

Quarterly sales of Automation Solutions segment were $2,870 million, up 17.6% year over year.

However, the fiscal third-quarter revenues of Commercial & Residential Solutions segment came in at $1,592 million, down 0.6% year over year.

Emerson Electric Co. Price, Consensus and EPS Surprise

 

Emerson Electric Co. Price, Consensus and EPS Surprise | Emerson Electric Co. Quote

Costs/Margins

Cost of sales in the reported quarter was $2,361 million, down 5.8% year over year. Gross profit margin expanded 220 basis points (bps) year over year to 43.7%. The upside stemmed from stronger revenues and benefits of the restructuring actions undertaken last year.

Selling, general and administrative expenses in the reported quarter were $931 million, down from $1,054 million reported in the year-ago quarter. Adjusted earnings before interest and taxes (EBIT) margin was 18.1%, up 180 bps year over year.

Balance Sheet/Cash Flow

Exiting the fiscal third quarter, Emerson had cash and cash equivalents of $3,411 million, up from $3,140 million recorded as of Jun 30, 2017. Long-term debt came in at $3,126 million, down from $3,797 million witnessed in the comparable period last year.

In nine-month period ended fiscal 2018, the company generated $1,868 million cash from operating activities, up from $1,058 million recorded in the year-earlier period. Capital expenditure totaled $314 million, up 4.7% year over year.

Outlook

Emerson expects that favorable end-market conditions will continue to drive its revenues and profitability in the quarters ahead. The company has raised its earnings view for fiscal 2018 from $3.10-$3.20 per share to $3.30-$3.40 per share.

This Zacks Rank #3 (Hold) company currently anticipates to generate 14% year-over-year net sales growth this fiscal.

Key Picks

Some better-ranked stocks in the Zacks Industrial Products sectorare listed below:

Altra Industrial Motion Corp. (AIMC - Free Report) sports a Zacks Rank of 1 (Strong Buy). The company pulled off an average positive earnings surprise of 4.01% over the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apogee Enterprises, Inc. (APOG - Free Report) carries a Zacks Rank #2 (Buy). The company came with up an average positive earnings surprise of 0.88% over the preceding four quarters.

Avery Dennison Corporation (AVY - Free Report) is another Zacks Rank #2 company. The stock generated an average positive earnings surprise of 6.10% during the same time frame.

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