Emerson (EMR) to Report Q3 Earnings: What's in the Cards?

Emerson Electric Co. EMR is set to release third-quarter fiscal 2022 (ended June 2022) results on Aug 9, before market open.

The Zacks Consensus Estimate for EMR’s earnings for the fiscal third quarter has been revised 0.8% downward in the past 90 days. However, Emerson has an impressive surprise history, with its earnings having outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 7.1%.

Let’s see how things are shaping up for Emerson this earnings season.

Key Factors and Estimates for Q3

Emerson is expected to have benefited from strength in its life sciences, chemical and power end markets along with improvements in electronics and semiconductor end markets. Also, strong demand across EMR’s commercial, industrial and residential end markets coupled with a robust backlog level at the Commercial & Residential Solutions segment is likely to have augmented its top line in the to-be-reported quarter.

Emerson acquired Fluxa in July 2022. The buyout enables Emerson to leverage Fluxa’s PKM software coupled with its DeltaV control system and life sciences automation software to provide customers with a comprehensive line of solutions for developing new drugs, thus contributing to its top-line growth.

However, raw material cost-inflation, supply-chain disruptions and labor constraints are likely to have weighed on Emerson’s performance in the fiscal third quarter. Given EMR’s international presence, a stronger U.S. dollar might have depressed its overseas business performance in the quarter.

The Zacks Consensus Estimate for Automation Solutions’ revenues for the fiscal third quarter is currently pegged at $3,078 million, indicating a 4.8% increase from the quarter-ago reported number. Our Estimate for Automation Solutions’ revenues for the fiscal third quarter is currently pegged at $3,102.2 million. The consensus estimate for revenues from the Commercial and Residential Solutions segment is pegged at $1,967 million, indicating a sequential increase of 19.6%. Our Estimate for the Commercial and Residential Solutions segment’s revenues for the fiscal third quarter is pegged at $1,992.7 million.

The Zacks Consensus Estimate for Emerson’s total revenues for the fiscal third quarter is currently pegged at $5,120 million, suggesting 6.9% growth from the quarter-ago reported number. The consensus estimate for earnings of $1.29 is in line with the quarter-ago reported number. Our Estimate for EMR’s total revenues for the fiscal third quarter is currently pegged at $5,089.8 million, while the same for earnings stands at $1.27.

Earnings Whispers

Our proven model does not 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. But this is not the case here, as you will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.   

Earnings ESP: Emerson has an Earnings ESP of -0.04%.

Emerson Electric Co. Price, Consensus and EPS Surprise

Emerson Electric Co. Price, Consensus and EPS Surprise

Emerson Electric Co. price-consensus-eps-surprise-chart | Emerson Electric Co. Quote

Zacks Rank: Emerson currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q2 Earnings

Emerson reported better-than-expected second-quarter fiscal 2022 (ended Mar 31, 2022) results, with earnings and sales surpassing estimates by 9.3% and 1.7%, respectively. Its adjusted earnings came in at $1.29 per share, beating the Zacks Consensus Estimate of $1.18. On a year-over-year basis, the bottom line improved 21%. EMR’s net sales were $4,791 million in the quarter, reflecting an increase of 8% from the year-ago quarter’s figure. Underlying sales were up 10%. The top line beat the Zacks Consensus Estimate of $4,711 million.

Stocks to Consider

Here are some companies that you may want to consider, as according to our model, these have the right combination of elements to beat on earnings this reporting cycle.

Helios Technologies HLIO has an Earnings ESP of +0.57% and a Zacks Rank #3. HLIO is slated to release second-quarter 2022 financial numbers on Aug 8.

The Zacks Consensus Estimate for Helios Technologies’ second-quarter earnings has remained steady over the past 60 days. HLIO has a stellar surprise history, with earnings having outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being approximately 29%.

MRC Global MRC has an Earnings ESP of +10.35% and a Zacks Rank of 1. MRC is set to release second-quarter 2022 results on Aug 8.

The Zacks Consensus Estimate for MRC Global’s second-quarter earnings has been revised 31.8% upward in the past 60 days. MRC’s earnings surpassed the Zacks Consensus Estimate in three of the preceding four quarters, meeting estimates in one. The average surprise is 140.8%.

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