Emerson Electric Co. EMR is likely to witness bottom and top-line growth when it reports first-quarter fiscal 2025 (ended Dec. 31, 2024) results on Feb. 5, before market open. The Zacks Consensus Estimate for revenues is pegged at $4.2 billion, indicating growth of 2.3% from the prior-year quarter’s figure.
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The consensus mark for earnings is pinned at $1.28 per share, which has remained steady in the past 60 days. The figure indicates a jump of 4.9% from the prior-year figure. The company’s bottom line surpassed the Zacks Consensus Estimate by 0.7% in the last reported quarter. EMR beat on earnings in each of the trailing four quarters, delivering an average surprise of 6.7%.
Emerson Electric Co. Price and EPS Surprise
Emerson Electric Co. price-eps-surprise | Emerson Electric Co. Quote
Let’s see how things might have shaped up for Emerson prior to the announcement.
Factors Likely to Have Shaped EMR’s Quarterly Performance
Strength across Emerson’s measurement and analytical, and final control businesses, driven by solid demand in the hybrid and process end markets, is likely to have supplemented the top-line performance of its Intelligent Devices segment in the fiscal first quarter. The segment’s results are likely to reflect solid demand across the energy and power end markets, and the company’s ability for strong backlog conversion.
However, softness in the discrete automation business, owing to sluggish demand in the market, is likely to have been a drag on the unit’s performance. We expect the Intelligent Devices segment’s revenues to increase 2.1% from the year-ago quarter's level to $2.89 billion.
Strength in the control systems and software business, driven by strength in the power, process and hybrid end markets, is likely to have augmented the performance of the Software and Control segment. Solid momentum in the Test & Measurement business, driven by strong demand in aerospace and defense end markets, is expected to have acted as a tailwind for the segment. We anticipate the segment’s revenues to increase 2% year over year to $1.34 billion.
EMR acquired Afag and Flexim in the fourth quarter of fiscal 2023 (ended September 2023). The buyout of Afag boosted Emerson’s capabilities in factory automation, helping it expand into lucrative end markets, including 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, EMR’s acquisition of National Instruments (October 2023), which has expanded its presence in high-growth end markets, including semiconductor and electronics, transportation and electric vehicles, is likely to have augmented its top line.
Given the strength across its end markets, Emerson has provided a bullish forecast for the quarter under review. The company expects net sales to increase in the band of 2.5-3.5% year over year in the fiscal first quarter. Underlying sales are expected to increase 2-3%.
However, escalating costs and expenses, related to its acquisition, and restructuring-related actions are likely to have affected EMR’s margin performance. Also, given the company’s substantial international operations, foreign currency headwinds are likely to have marred its margins and profitability.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Emerson this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as elaborated below.
Earnings ESP: Emerson has an Earnings ESP of -0.55%, as the Most Accurate Estimate is pegged at $1.27 per share, which is lower than the Zacks Consensus Estimate of $1.28. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank of 3.
Stocks With the Favorable Combination
Here are three companies, which according to our model, have the right combination of elements to post an earnings beat this season.
Allegion plc ALLE has an Earnings ESP of +1.34% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to release fourth-quarter results on Feb. 18. Allegion’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 9.9%.
Flowserve Corporation FLS has an Earnings ESP of +2.60% and a Zacks Rank of 3 at present. The company is slated to release fourth-quarter results on Feb. 18.
Flowserve’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark in one, the average surprise being 10.8%.
Stanley Black & Decker SWK has an Earnings ESP of +3.82% and a Zacks Rank of 3 at present. The company is slated to release its fourth-quarter 2024 results on Feb. 5.
SWK’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 18.6%.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
