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1. Company Snapshot

1.a. Company Description

Emerson Electric Co., a technology and engineering company, provides various solutions for customers in industrial, commercial, and residential markets in the Americas, Asia, the Middle East, Africa, and Europe.The company operates through Automation Solutions, and Commercial & Residential Solutions segments.The Automation Solutions segment offers measurement and analytical instrumentation, industrial valves and equipment, and process control software and systems.


It serves oil and gas, refining, chemicals, power generation, life sciences, food and beverage, automotive, pulp and paper, metals and mining, and municipal water supplies markets.The Commercial & Residential Solutions segment offers residential and commercial heating and air conditioning products, such as reciprocating and scroll compressors; system protector and flow control devices; standard, programmable, and Wi-Fi thermostats; monitoring equipment and electronic controls for gas and electric heating systems; gas valves for furnaces and water heaters; ignition systems for furnaces; sensors and thermistors for home appliances; and temperature sensors and controls.It also provides reciprocating, scroll, and screw compressors; precision flow controls; system diagnostics and controls; and environmental control systems.


In addition, this segment offers air conditioning, refrigeration, and lighting control technologies, as well as facility design and product management, site commissioning, facility monitoring, and energy modeling services; tools for professionals and homeowners; and appliance solutions.Emerson Electric Co. was incorporated in 1890 and is headquartered in Saint Louis, Missouri.

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1.b. Last Insights on EMR

Emerson Electric Co.'s recent performance was driven by solid momentum across its Intelligent Devices and Software and Control segments, which contributed to its Q3 earnings beat. The company's strength in power markets and software demand also supported its results. Despite margin pressures, Emerson's automation solutions are poised to benefit from US trade deals and tariffs, driving investments in energy, utilities, and pharmaceuticals.

1.c. Company Highlights

2. Emerson's Q4 and Full Year 2025 Earnings: A Strong Performance

Emerson delivered a solid financial performance in 2025, with underlying sales growing 3% and adjusted earnings per share increasing by 9% to $6. The company's free cash flow also saw a significant boost, rising 12% to $3.24 billion. The actual EPS for the fourth quarter came out at $1.62, in line with analyst estimates. The annual contract value of software grew 10% year-over-year, ending the year at $1.56 billion, indicating a strong momentum in the company's software business.

Publication Date: Nov -06

📋 Highlights
  • 2025 Performance:: Underlying sales rose 3%, adjusted EPS reached $6 (+9% YoY), and free cash flow hit $3.24 billion (+12% YoY).
  • 2026 Guidance:: Projects 5.5% sales growth, 28% adjusted EBITDA margin, $6.35–$6.55 EPS, and $3.5–3.6 billion free cash flow (+10% growth).
  • Capital Returns:: Plans $2.2 billion shareholder returns ($1 billion buybacks, $1.2 billion dividends) and a 5% dividend increase, marking 70th consecutive raise.
  • Software & ACV Growth:: Annual contract value (ACV) grew 10% to $1.56 billion, with double-digit growth expected in 2026, aligning with Rule of 45.
  • Market Exposure:: $11.1 billion project funnel includes power, LNG, and life sciences; Ovation controls 30% of global power generation, with $2 billion in LNG backlog.

Guidance for 2026

Emerson expects to deliver 5.5% sales growth in 2026, with underlying sales growing approximately 4%. The company projects adjusted segment EBITDA margin of approximately 28% and adjusted earnings per share of $6.35 to $6.55. Free cash flow is expected to be between $3.5 billion to $3.6 billion, representing approximately 10% growth. The guidance suggests that the company is poised for continued growth, driven by its investments in growth verticals and robust performance in Test & Measurement.

Segment Performance

The Test & Measurement business continues to show momentum, with growth expected in aerospace and defense, semiconductors, and broad-based portfolio business. Ovation controls approximately 30% of the world's power generation, with over 50% in the US, providing Emerson with great visibility into the power generation market. The company's software annual contract value (ACV) finished the year at $1.56 billion, up 10%, and is expected to continue with double-digit growth in 2026.

Valuation Metrics

To understand what's priced in, we can look at Emerson's valuation metrics. The company's P/E Ratio is 32.66, indicating that the stock may be slightly overvalued. The P/S Ratio is 4.14, and the EV/EBITDA is 17.62, suggesting that the company's growth prospects are already factored into its stock price. The Dividend Yield is 1.59%, and the Free Cash Flow Yield is 3.68%, providing a relatively attractive return for investors. The Net Debt / EBITDA ratio is expected to decrease from 2.3x in 2025 to approximately 2x in 2026, indicating a healthy balance sheet.

Outlook

Emerson's capital allocation plan includes $1 billion in share repurchases, with M&A being opportunistic and not having any current plans. The company's backlog remains flat, with a $1.5 billion reduction in S&D projects, but the funnel remains flat due to an uptick in power generation, LNG, and continued build-out of the funnel in aerospace and defense and life sciences. Overall, Emerson's strong financial performance, coupled with its growth prospects, positions the company for continued success in 2026.

3. NewsRoom

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Intelligent Devices Segment Drives Emerson: Can the Momentum Sustain?

Dec -02

Source: zacks.com

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Best Dividend Aristocrats For December 2025

Nov -29

Source: seekingalpha.com

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Advisors Asset Management Inc. Sells 11,591 Shares of Emerson Electric Co. $EMR

Nov -26

Source: defenseworld.net

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Bank Julius Baer & Co. Ltd Zurich Has $96.50 Million Stake in Emerson Electric Co. $EMR

Nov -21

Source: defenseworld.net

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Emerson Electric Co. (EMR) Discusses Portfolio Transformation and Segment Reorganization Strategy Transcript

Nov -21

Source: seekingalpha.com

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Emerson Highlights Strategy for Engineering the Autonomous Future at 2025 Investor Conference

Nov -20

Source: prnewswire.com

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Emerson Electric Co. $EMR Holdings Raised by Alteri Wealth LLC

Nov -19

Source: defenseworld.net

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Emerson Electric Co. (NYSE:EMR) Receives Consensus Recommendation of “Moderate Buy” from Brokerages

Nov -19

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.25%)

6. Segments

Intelligent Devices - Final Control

Expected Growth: 6.1%

Emerson's Intelligent Devices Final Control segment is driven by increasing demand for industrial automation, digital transformation, and energy efficiency. The segment's growth is also fueled by its strong presence in the oil and gas industry, and its ability to provide customers with real-time data and insights to optimize their operations.

Intelligent Devices - Measurement & Analytical

Expected Growth: 6.5%

Emerson Electric Co.'s devices for measurement and analytics are expected to see significant growth driven by increasing demand for industrial automation, digitalization, and stringent regulations, leading to improved operational efficiency and reduced costs.

Software and Control - Control Systems & Software

Expected Growth: 5.6%

None

Software and Control - Test & Measurement

Expected Growth: 5.6%

Emerson Electric Co.’s test and measurement solutions growth is driven by increasing demand for industrial automation, IoT, and 5G technologies, as well as growing investments in renewable energy and infrastructure development.

Intelligent Devices - Discrete Automation

Expected Growth: 6.5%

Emerson Electric Co.’s discrete automation solutions drive efficiency and productivity, leveraging IoT and AI advancements, increasing demand from industries such as oil and gas, power generation, and manufacturing.

Intelligent Devices - Safety & Productivity

Expected Growth: 6.5%

Emerson’s safety and productivity solutions drive growth, as customers seek to minimize operational risks and optimize output. Industrial automation and digital transformation are key fundamental drivers.

Software and Control - Aspen Tech

Expected Growth: 7.4%

Increasing adoption of Industrial Internet of Things and artificial intelligence in process industries drives demand for AspenTech's software and control solutions, enhancing operational efficiency and profitability.

Eliminations

Expected Growth: 4.3%

Emerson Electric Co.'s Eliminations segment is driven by growing demand for industrial automation, increasing adoption of IoT technologies, and strategic acquisitions, leading to a forecasted CAGR of 4.3%.

7. Detailed Products

Automation Solutions

Emerson's automation solutions provide control systems, valves, and instruments to optimize plant performance and efficiency.

Commercial and Residential Solutions

Emerson's commercial and residential solutions offer heating, ventilation, and air conditioning (HVAC) systems, as well as refrigeration and cold chain management.

Network Power

Emerson's network power solutions provide AC and DC power systems, as well as outside plant and network infrastructure, for telecommunications and data centers.

Process Management

Emerson's process management solutions offer control systems, valves, and instruments to optimize process efficiency and safety in industries such as oil and gas, refining, and chemical.

Climate Technologies

Emerson's climate technologies provide heating, ventilation, and air conditioning (HVAC) systems, as well as refrigeration and cold chain management, for commercial and residential applications.

8. Emerson Electric Co.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Emerson Electric Co. operates in a industry where substitutes are available, but they are not a significant threat. The company's products are highly specialized and customized, making it difficult for substitutes to replace them.

Bargaining Power Of Customers

Emerson Electric Co. has a diverse customer base, which reduces the bargaining power of individual customers. The company's products are also critical to its customers' operations, making it difficult for them to negotiate prices.

Bargaining Power Of Suppliers

Emerson Electric Co. has a moderate level of dependence on its suppliers. While the company has a diverse supplier base, some of its suppliers have a high level of bargaining power due to their size and importance to the company's operations.

Threat Of New Entrants

The threat of new entrants in the industry is low due to the high barriers to entry, including the need for significant capital investment and specialized expertise. Emerson Electric Co. has a strong brand reputation and established relationships with customers, making it difficult for new entrants to gain traction.

Intensity Of Rivalry

The industry in which Emerson Electric Co. operates is highly competitive, with several established players competing for market share. The company must continually innovate and improve its products and services to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 28.28%
Debt Cost 3.95%
Equity Weight 71.72%
Equity Cost 10.77%
WACC 8.84%
Leverage 39.43%

11. Quality Control: Emerson Electric Co. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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AMETEK

A-Score: 5.4/10

Value: 1.7

Growth: 6.1

Quality: 8.1

Yield: 1.0

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

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Emerson Electric

A-Score: 5.3/10

Value: 2.4

Growth: 3.1

Quality: 6.5

Yield: 4.0

Momentum: 7.0

Volatility: 8.7

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Roper Technologies

A-Score: 5.0/10

Value: 2.6

Growth: 5.7

Quality: 7.4

Yield: 1.0

Momentum: 3.0

Volatility: 10.0

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Dover

A-Score: 4.9/10

Value: 3.7

Growth: 4.9

Quality: 7.4

Yield: 2.0

Momentum: 3.0

Volatility: 8.7

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Otis

A-Score: 4.9/10

Value: 4.4

Growth: 4.4

Quality: 5.7

Yield: 3.0

Momentum: 3.0

Volatility: 9.0

1-Year Total Return ->

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Ingersoll Rand

A-Score: 4.3/10

Value: 1.8

Growth: 7.6

Quality: 6.6

Yield: 0.0

Momentum: 2.5

Volatility: 7.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

137.39$

Current Price

137.39$

Potential

-0.00%

Expected Cash-Flows