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Emerson (EMR) to Post Q4 Earnings: Is a Beat in the Cards?

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Emerson Electric Co. (EMR - Free Report) is scheduled to report fourth-quarter fiscal 2018 (ended Sep 2018) results on Nov 6, before market open.

The company pulled off an average positive earnings surprise of 5.13% over the last four quarters, beating estimates in each. Notably, in the last reported quarter, Emerson’s earnings of 88 cents per share surpassed the Zacks Consensus Estimate by 2.33%.

We expect the company to score an earnings beat in the fiscal fourth quarter as well.

Why a Likely Positive Surprise

Our proven model shows that Emerson has the right combination of the two key ingredients to beat earnings. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:

Earnings ESP: Emerson has an Earnings ESP of +2.00% as the Most Accurate Estimate is pegged at 94 cents, higher than the Zacks Consensus Estimate of 92 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3, which when combined with a positive ESP, makes us reasonably confident of an earnings beat.

Conversely, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Factors Driving Better-than-Expected Results

Emerson is well positioned to benefit from global infrastructure growth, as its core businesses hold dominant positions in markets tied to energy efficiency and infrastructure spending. Many of the company's products are key components for building infrastructure such as data centers, manufacturing plants and office buildings.

Also, environmental regulations are driving the need for new products, adding to the company's strength. Emerson believes that telecommunications infrastructure demand will continue to be one of the strongest growth drivers.

Going forward, the company expects increased turnaround activity and ongoing mid and small-sized Maintenance, Repair and Operations projects to bolster revenues of its Automation Solutions segment. On the other hand, continued growth in air conditioning demand will likely drive the top-line performance of Commercial & Residential Solutions segment.

Moreover, the Zacks Consensus Estimate for revenues from the Automation Solutions segment in the to-be-reported quarter is currently pegged at $3,218 million. It reported revenues of $2,870 million in the previous quarter. Revenues from Commercial & Residential Solutions segment are expected to be $1,683 million compared with $1,592 million reported in the fiscal third quarter.

Other Stocks to Consider

Here are some other companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Kennametal Inc. (KMT - Free Report) has an Earnings ESP of +0.22% and a Zacks Rank #2.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere & Company (DE - Free Report) has an Earnings ESP of +1.55% and a Zacks Rank #3.

Sonoco Products Company (SON - Free Report) has an Earnings ESP of +0.19% and a Zacks Rank #3.

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