EMR - Emerson Electric Co.

NYSE - NYSE Delayed price. Currency in USD
73.66
+0.10 (+0.14%)
At close: 4:03PM EST

73.02 -0.64 (-0.87%)
After hours: 4:37PM EST

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Previous close73.56
Open73.69
Bid73.26 x 900
Ask73.68 x 800
Day's range73.23 - 73.75
52-week range55.39 - 75.54
Volume1,838,733
Avg. volume2,936,996
Market cap44.87B
Beta (3Y monthly)1.37
PE ratio (TTM)19.85
EPS (TTM)3.71
Earnings date3 Feb 2020 - 7 Feb 2020
Forward dividend & yield2.00 (2.72%)
Ex-dividend date2019-11-14
1y target est75.67
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  • Emerson Electric Co. (NYSE:EMR) Is Yielding 2.7% - But Is It A Buy?
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  • Emerson Avoids an Activist Fight But Not the Gloom
    Bloomberg

    Emerson Avoids an Activist Fight But Not the Gloom

    (Bloomberg Opinion) -- Emerson Electric Co. may have dodged a proxy fight, but it can’t avoid an earnings slump.The maker of air-conditioner components and automation equipment said Tuesday that it would add the former chief executive officer of Flowserve Corp. to its board and pledged to complete a review of its operations by February. The moves are meant to be a balm for activist investor D.E. Shaw & Co., which has called for more aggressive cost cuts, corporate governance improvements and a breakup. A lack of tangible commitments and deadlines in Emerson’s agreement to consider the activist’s recommendations likely contributed to a notably feisty letter from D.E. Shaw last month that blasted what it described as a bloated budget, including a corporate aviation department with no fewer than eight jets, a helicopter and its own intern.Emerson’s new board member, Mark Blinn, was CEO of Flowserve from 2009 to 2017. He’s not a household name, and Flowserve underperformed the S&P 500 Index during his tenure, but he was one of four candidates D.E. Shaw recommended, according to Bloomberg News. As such, the activist said Tuesday that it would back the company’s slate. According to D.E. Shaw, Emerson has also committed to reviewing how it pays its executives and will seek shareholder approval to amend its charter so that directors are elected annually. There was no update on those corporate jets in the earnings materials released Tuesday morning, although a conference call is scheduled for later this afternoon.Emerson’s concessions to D.E. Shaw are wise; it’s not in a position to pick a fight now. Also on Tuesday, the company released disappointing guidance for its 2020 fiscal year and predicted the coming U.S. presidential election, continued trade tensions and increased restructuring by manufacturers would leave investment decisions stalled. “We are planning for a challenging economic environment,” CEO David Farr said in the news release. This was a notably more downbeat outlook on the economy than other industrial companies have given this earnings season and contrasts with Parker-Hannifin Corp.’s prediction last week that its own sales slump would bottom out in the middle of its 2020 fiscal year.  Emerson’s guidance for $3.48 to $3.72 in adjusted earnings per share implies a decline compared with last year’s numbers on the same basis. Sales may slump as much as 2%, excluding the impact of currency swings and M&A. With numbers like that, Emerson’s goal of achieving $4.50 in EPS by 2021 would be a significant stretch. Emerson said it will “reset” its long-term guidance as part of its February update. What’s troubling is that Emerson’s 2020 outlook doesn’t appear to reflect many benefits from the $95 million it spent cutting costs over the past year to adjust its operations to the downturn, Gordon Haskett analyst John Inch wrote in a report on Tuesday. That’s key because cost cuts sit at the crux of D.E. Shaw’s argument for a higher stock price. Analysts have pushed back on D.E. Shaw’s estimate of more than $1 billion in excess costs at Emerson, noting that some of the activist investor’s margin comparisons are unfair because many of the company’s rivals strip out restructuring, pension expenses and other expenses. In response, Emerson provided additional details about its pension and stock compensation costs for its most recent results. But it also moved to an adjusted earnings outlook after previously giving its forecast on a GAAP basis except in certain circumstances. The company says this is because 2020 restructuring actions will be determined as part of the board’s review and the guidance will be updated in February to reflect that. Let’s hope that’s true and that D.E. Shaw’s push doesn’t have the unfortunate side effect of yet another industrial company becoming addicted to earnings adjustments.To contact the author of this story: Brooke Sutherland at bsutherland7@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Emerson's (EMR) Q4 Earnings Meet Estimates, Increase Y/Y
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  • Bloomberg

    Emerson Plans Measures to Reach Peace With D.E. Shaw

    (Bloomberg) -- Emerson Electric Co. is expected to announce measures Tuesday aimed at striking a truce with investor D.E. Shaw & Co., which has pushed for a breakup of the automation-equipment manufacturer, according to people familiar with the matter.Emerson Electric is expected to appoint to its board Mark Blinn, the former chief executive officer of Flowserve Corp., said the people, asking not to be identified because the matter is private. Blinn was among four possible board candidates D.E. Shaw had put forth, the people said.The company is also expected to announce that it will complete its strategic review by early next year, the people said. It will also review its corporate governance, they added.Emerson rose 2% in trading Monday to close at $73.22 in New York, giving the company a market value of about $45 billion.Emerson Electric, based in St. Louis, is expected to announce the measures when it releases its third-quarter results Tuesday, the people said.Representatives for D.E. Shaw and Emerson Electric declined to comment.D.E. Shaw disclosed a position in Emerson Electric last month and urged the company’s board to split its business into two units: an industrial automation company and a climate technology-focused company. The moves, combined with other measures including cost cuts, could create more than $20 billion in equity value, the New York-based investor said.Emerson Electric will carry out a wide-ranging review of its business, the company announced last month. It has underperformed its peers since losing about a third of its sales in a previous restructuring.(Updates with additional details in paragraph three, share price in paragraph four.)To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.netTo contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Matthew Monks, Michael HythaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

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  • Eight Corporate Jets: What Is This, the '80s?
    Bloomberg

    Eight Corporate Jets: What Is This, the '80s?

    (Bloomberg Opinion) -- The activist investors are on the tarmac at Emerson Electric Co.D.E. Shaw Group on Tuesday released a letter calling for the $42 billion industrial company to spin off its climate division and make productivity and corporate-governance improvements, including culling its fleet of eight corporate jets and a helicopter. The public pressure follows reports late last month that D.E. Shaw was seeking a breakup of the company and Emerson’s subsequent announcement that it would review its operations.In its letter, D.E. Shaw takes issue with the lack of tangible commitments and deadlines for Emerson’s strategic review and stresses that some of its recommendations – such as making all board directors subject to annual elections – shouldn’t require that much deliberation in this day and age.D.E. Shaw is justified in its wariness of Emerson kicking the can down the road. CEO David Farr has been in his role for 19 years and, according to analysts, he’s signaled he will retire in fiscal 2021 or 2022 and would prefer to leave any decision on a breakup to his successor. RBC analyst Deane Dray speculated earlier this month that a preliminary update on the outcome of Emerson’s strategic review may not come until the company’s annual analyst meeting in February. Emerson is 129 years old and on track to generate $18.5 billion in revenue this year; change doesn’t happen quickly at companies like that. But in a way, that reinforces the activist investor’s argument.Emerson needs to reckon with its remaining vestiges of crusty corporate habits and old-school sprawl. Examples include the high personal usage by the CEO of that corporate jet fleet (which is managed by 40-plus employees and an intern, apparently), guaranteed three-year and staggered terms for board directors, and a jaw-dropping 18 separate office and factory buildings in the Houston area. Let's hope none of those corporate jets fly empty behind Farr’s plane, in the vein of the reported practices of former General Electric Co. CEO Jeff Immelt.Calling attention to those practices is a smart tactic that will resonate with fellow shareholders irked by Emerson’s lackluster returns, and should ramp up pressure on management to make changes more quickly. I would add to D.E. Shaw’s list of grievances a bias toward less transparency: Emerson is the only major industrial company I cover that declines to routinely webcast its presentations at major conferences.The biggest change advocated by D.E. Shaw is a breakup of Emerson. It’s an idea that’s long been bandied about because the Emerson division that sells air-conditioner controls and food-disposal systems has little to do with the unit purveying automation equipment. The company has slimmed down already, divesting about $6 billion of revenue, including the network power business it cobbled together through billions of dollars worth of disappointing acquisitions. Analysts aren’t convinced that a bigger split would pay off in the stock price.Emerson should be valued at about $73 a share based on the sum of its parts, according to the average of three analysts’ estimates. That’s just 3% higher than where Wall Street on average expected Emerson’s stock to rise over the next year before reports of D.E. Shaw’s involvement. The hedge fund, for its part, estimates Emerson could be valued at $77 if its parts were valued comparably to the average of its peers, a meaningful improvement but not a knock-your-socks-off game-changer. The real value comes through the combination of a breakup with the cost-cutting initiatives. In that scenario, D.E. Shaw sees the potential for Emerson’s valuation to rise to $101 a share. Analysts have long recognized that typical sum-of-the-parts estimates tend to underestimate the efficiency gains that come from more focused management teams, so there may be something to this kind of analysis. The prospect of a deepening downturn in the industrial sector should add to the sense of urgency for the cost-cutting opportunities D.E. Shaw has identified. Emerson in August warned that $350 million of projects planned for 2019 had been pushed to next year, while $450 million of 2020 projects had been delayed to 2021. Analysts are bracing for those numbers to get worse when the company reports its fiscal-fourth-quarter results in November, and for its 2021 earnings goals to slip out of reach. D.E. Shaw estimates Emerson can cut more than $1 billion of costs by streamlining corporate functions and improving margins in its automation division. In response to the activist investor’s letter, Farr pointed out that Emerson was “one of the first industrial companies to address the concerning trends in the macroeconomic environment.” That’s true to an extent, but its own plan calls for $100 million in restructuring spending this year, less drastic than what D.E. Shaw is proposing.I remain concerned that the industrial breakup craze is going too far and we don’t properly understand the longer-term implications of it. But the corporate-governance and cost-management shortcomings highlighted by D.E. Shaw will make it harder for Emerson’s management team to resist it.To contact the author of this story: Brooke Sutherland at bsutherland7@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

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