EMR
Emerson Electric Co.
Industrial/Transportation
10/17/2022
Presented
| Date | 10/11/2022 |
| Price | $78.00 |
| Market Cap | $46.12B |
| Ent Value | $63.00B |
| P/E Ratio | 14.75x |
| Book Value | $17.42 |
| Div Yield | 2.64% |
| Shares O/S | 591.30M |
| Ave Daily Vol | 2,747,917 |
| Short Int | 0.81% |
Current
| Price | $109.25 |
| Market Cap | $62.57B |
| Emerson Electric Co. is a global technology and engineering company, which provides innovative solutions for customers in industrial, commercial and residential markets. It operates through the following business segments: Automation Solutions, Climate Technologies, and Tools and Home Products. The Automation Solutions segment offers products, integrated solutions, software and services which enable process, hybrid and discrete manufacturers to maximize production, protect personnel and the environment, reduce project costs, and optimize their energy efficiency and operating costs. The Climate Technologies segment provides products and services for many areas of the climate control industry, including residential heating and cooling, commercial air conditioning, and commercial and industrial refrigeration. The Tools and Home Products segment provides tools for professionals and homeowners and appliance solutions. The company was founded by Charles Meston and Alexander Meston on September 24, 1890, and is headquartered in St. Louis, MO. |
Publicly traded companies mentioned herein: Aspen Technology Inc (AZPN), Blackstone Inc (BX), Emerson Electric Co (EMR), Rockwell Automation Inc (ROK), Whirlpool Corp (WHR)
Highlights
The presenter is long shares of Emerson Electric Co (EMR), a $46B market cap multi-industrial company that generates $20B in sales. EMR’s largest segment is its Automation Solutions business (64% of 2021 revenue), which is a leading process automation provider offering float control components, instrumentation, and software to Process industries (chemicals, refining, pharmaceuticals, O&G, etc.); the balance of EMR’s revenue is largely attributable to its Commercial & Residential Solutions segment that primarily provides climate technologies to HVAC OEMs and also has a tools & home products business. The company has been around for over a century, consistently supports >20% EBITDA margins, and tends to rank well in terms of margins and returns compared to other multi-industrial companies. Despite this, the stock has been an underperformer for the last few years based on a lack of management credibility and end market weakness. Going forward, he sees a business that is executing on a transformation following the 2021 leadership change and models slight upside to the Street’s $5.95 FY2024 EPS projection, believing it can exceed $6. Underwriting a high-teen multiple in line with its historical valuation and current valuations of comps (e.g., ROK) gets the stock to a price of $110 per share.
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