Back to top

Image: Bigstock

Emerson (EMR) Discusses Strategic Targets at Investor Day

Read MoreHide Full Article

Emerson Electric Co. (EMR - Free Report) CEO David N. Farr highlighted the company’s future priorities and financial targets at the recently held annual investor conference.

He communicated that digital transformation, investment efforts, productivity and cost reductions efforts are key components of the company’s long-term value creation model. These priorities are strengthening its capabilities to deliver high values to customers and shareholders.

Emerson conveyed that it would not split its business into two separate companies: an industrial automation company and a climate technology company. As noted, the company will continue to operate under its existing business divisions — Automation Solutions and Commercial & Residential Solutions.Also, the company will remain focused on strategic acquisitions apart from evaluating its portfolio for divestiture opportunities. Notably, for 2019-2023, the company has earmarked $4 billion for acquisition purposes. In addition, Emerson highlighted its cost reduction priorities, per which, it will work on footprint optimization of its manufacturing and services facilities.

The company also stated its capital-allocation strategies. For 2019-2023, Emerson anticipates spending significant portion of its capital on growth investments, with capital expenditures amounting to $3.4 billion. In addition, during the period, shares worth $6.3 billion are likely to be repurchased and dividends worth $6.1 billion will be paid.

For fiscal 2020 (ending September 2020), the company estimates Automation Solutions net sales to decline 1% to increase 3%, while Commercial & Residential Solutions net sales are projected in the range of 4% decline to breakeven. For 2019-2023, the company expects Automation Solutions sales to grow in the range of 2-4% (CAGR), while Commercial & Residential Solutions is likely to witness 2-3% sales growth (CAGR).

Zacks Rank & Price Performance

Emerson, which has a market cap of roughly $44.8 billion, currently carries a Zacks Rank #2 (Buy). In the past six months, the company’s shares have returned 29.7% compared with the industry’s growth of 29%.

Analysts have become increasingly bullish about the company over the past 30 days. Its earnings estimates for fiscal 2020 have increased from $3.63 to $3.66 on account of five upward estimate revisions versus one downward.

Other Stocks to Consider

Some other top-ranked stocks from the Zacks Industrial Products sector are Actuant Corporation (EPAC - Free Report) , Barnes Group, Inc. (B - Free Report) and Cintas Corporation (CTAS - Free Report) . All these companies carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Actuant delivered positive earnings surprise of 18.57%, on average, in the trailing four quarters.

Barnes Group delivered positive earnings surprise of 4.21%, on average, in the trailing four quarters.

Cintas pulled off positive earnings surprise of 8.50%, on average, in the trailing four quarters.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>