Emerson Electric Co. EMR has been benefiting from strength across its segments and accretive acquisitions. The company’s efforts to reward its shareholders add to its appeal.

Headquartered in St. Louis, MO, Emerson is a diversified global engineering and technology company. It offers a wide range of products and services to customers in the consumer, commercial and industrial markets.

In the past year, this Zacks Rank #3 (Hold) company’s shares have gained 13.3% against the industry’s 10.6% decline.

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Let’s discuss the factors that should influence investors to retain this company for the time being.

Segmental Strength: Healthy demand across most of Emerson’s end markets is aiding its results. Solid demand in the process and hybrid industries is boosting underlying sales (up 2% in the fiscal first quarter).

Solid momentum in the Intelligent Devices and Software and Control segments is supporting EMR’s performance. Within the Intelligent Devices segment, it is seeing strength in the Final Control business, driven by solid momentum in power end markets. Robust growth in all geographies and strong backlog conversion levels are aiding the Measurement & Analytical business. Within the Software and Control segment, strength in the power and process end markets is supporting the Control Systems & Software business. An increase in license revenues, driven by favorable timing of renewals and growth in new contracts, is supporting AspenTech’s growth.

Accretive Acquisitions: EMR has solidified its product portfolio and leveraged business opportunities through asset additions. In January 2025, it signed an agreement to acquire the remaining shares of AspenTech. Per the deal, Emerson will offer $265 in cash for each of the remaining shares of AspenTech. This follows the company’s 55% majority stake in AspenTech, acquired in 2022, and will increase its ownership to 100%, making AspenTech a wholly owned subsidiary. 

In the fourth quarter of fiscal 2023, the company completed the acquisitions of Afag and Flexim. The buyout of Afag boosted Emerson’s capabilities in factory automation, helping it expand into lucrative end markets, battery manufacturing, automotive, packaging, medical, life sciences and electronics. The acquisition of Flexim added to its existing flow measurement positions in coriolis, differential pressure, magmeter and vortex flow measurement and expanded its automation portfolio and measurement capabilities.

Also, in October 2023, EMR completed the buyout of National Instruments for $8.2 billion, which strengthened its global automation foothold, helping it expand into high-growth end markets, including semiconductor and electronics, transportation and electric vehicles and aerospace and defense.

Rewards to Shareholders: EMR is committed to rewarding its shareholders handsomely. The company paid out dividends of $301 million and repurchased common stocks worth $899 million in the fiscal first quarter. In November 2024, it hiked its dividend by 0.5%. Emerson plans to repurchase shares worth $2 billion and pay out dividends of $1.2 billion in fiscal 2025.

Downsides of EMR Stock

Business Weakness: EMR has been witnessing weakness in the Safety & Productivity, Discrete Automation and Test & Measurement businesses of late. The Safety & Productivity business is witnessing weakness owing to tepid demand for its product in the Americas and Europe regions. Sales from the business declined 3% in the first quarter of fiscal 2025. The Discrete Automation business’ sales declined 5% in the fiscal first quarter due to softness across all geographies. Weakness in the Europe region is adversely affecting the Test & Measurement business’ sales, which declined 6% in the fiscal first quarter.

Forex Woes: The company’s international presence keeps it exposed to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar is likely to require EMR to either raise prices or contract profit margins in locations outside the United States. Adverse foreign currency translation lowered the company’s sales by 1% year over year in the fourth quarter. Emerson expects foreign currency translation to have an adverse impact of approximately 1.5% in fiscal 2025.

Stocks to Consider

Some better-ranked companies are discussed below.

RBC Bearings Incorporated RBC currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

RBC delivered a trailing four-quarter average earnings surprise of 4.9%. In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 earnings has increased 1.2%.

Enersys ENS presently sports a Zacks Rank of 1. The company delivered a trailing four-quarter average earnings surprise of 2.2%.

In the past 60 days, the consensus estimate for ENS’ fiscal 2025 earnings has increased 7.2%.

Applied Industrial Technologies AIT presently carries a Zacks Rank of 2. AIT delivered a trailing four-quarter average earnings surprise of 5.3%.

In the past 60 days, the consensus estimate for AIT’s fiscal 2025 earnings has inched up 1.4%.

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Emerson Electric Co. (EMR) : Free Stock Analysis Report

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