Emerson Electric Co. is not just a player in the industrial machinery sector; it’s a transformative force that enhances how industries operate and how people interact with technology daily. With a diverse suite of automation solutions and commercial products, Emerson stands at the forefront of innovation, delivering quality and efficiency across various markets, from oil and gas to residential heating. As we explore Emerson’s current market position and growth potential, the critical question remains: do its fundamentals still justify its market valuation?
Table of contents
Company Description
Emerson Electric Co. is a prominent player in the industrial machinery sector, established in 1890 and based in Saint Louis, Missouri. With a market capitalization of approximately $77.2B, the company operates through two distinct segments: Automation Solutions and Commercial & Residential Solutions. It provides a wide range of products and services, including measurement and analytical instrumentation, HVAC systems, and process control technologies, serving diverse markets such as oil and gas, life sciences, and residential sectors across the Americas, Asia, Europe, and Africa. Emerson’s strategic focus on innovation and sustainability positions it as a leader in shaping efficient and environmentally friendly industrial solutions.
Fundamental Analysis
In this section, I will analyze Emerson Electric Co.’s income statement, financial ratios, and dividend payout policy to provide insights for potential investors.
Income Statement
The following table presents the Income Statement for Emerson Electric Co. (Ticker: EMR) over the last five fiscal years, highlighting key financial metrics.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | 12.93B | 13.80B | 15.17B | 17.49B | 18.02B |
| Cost of Revenue | 7.20B | 7.50B | 7.74B | 8.61B | 8.50B |
| Operating Expenses | 3.77B | 3.95B | 4.67B | 6.22B | 7.28B |
| Gross Profit | 5.73B | 6.31B | 7.43B | 8.89B | 9.52B |
| EBITDA | 2.69B | 3.50B | 4.21B | 4.03B | 4.86B |
| EBIT | 1.93B | 2.66B | 3.16B | 2.34B | 3.17B |
| Interest Expense | 0.16B | 0.23B | 0.26B | 0.32B | 0.24B |
| Net Income | 2.30B | 3.23B | 13.22B | 1.97B | 2.29B |
| EPS | 3.85 | 4.63 | 3.75 | 3.44 | 4.06 |
| Filing Date | 2021-11-15 | 2022-11-14 | 2023-11-13 | 2024-11-12 | 2025-11-10 |
Interpretation of Income Statement
Over the five-year period, Emerson Electric Co. has seen a steady increase in revenue, climbing from 12.93B in 2021 to 18.02B in 2025. Notably, the net income showed significant fluctuation, particularly in 2023, where it surged to an extraordinary 13.22B, likely due to non-recurring gains. The operating expenses have increased, reflecting growing operational scale, but the gross profit margin has remained stable, indicating effective cost control. In the most recent year, while revenue continued to rise, net income saw a slight decline, suggesting potential pressure on profit margins, which warrants close monitoring in the upcoming quarters.
Financial Ratios
Here is a summary of Emerson Electric Co.’s financial ratios over the past few years.
| Ratios | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | 17.81% | 23.41% | 87.17% | 11.25% | 12.73% |
| ROE | 23.30% | 31.18% | 63.89% | 9.10% | 11.30% |
| ROIC | 8.14% | 6.08% | 5.62% | 5.43% | 4.62% |
| P/E | 24.46 | 13.44 | 4.19 | 31.75 | 32.42 |
| P/B | 5.70 | 4.19 | 2.68 | 2.89 | 3.66 |
| Current Ratio | 1.35 | 1.09 | 2.75 | 1.77 | 0.88 |
| Quick Ratio | 1.02 | 0.87 | 2.35 | 1.40 | 0.65 |
| D/E | 0.72 | 1.03 | 0.41 | 0.38 | – |
| Debt-to-Assets | 28.64% | 29.96% | 20.03% | 18.53% | 31.26% |
| Interest Coverage | 11.80 | 10.33 | 10.57 | 8.25 | 9.44 |
| Asset Turnover | 0.52 | 0.39 | 0.35 | 0.40 | – |
| Fixed Asset Turnover | 3.46 | 6.17 | 6.42 | 6.23 | – |
| Dividend Yield | 2.15% | 2.82% | 2.16% | 1.92% | 1.60% |
Interpretation of Financial Ratios
Analyzing Emerson Electric Co. (EMR) as of FY 2025, the liquidity ratios indicate a current ratio of 0.88 and a quick ratio of 0.65, suggesting potential short-term liquidity concerns. The solvency ratio stands at 0.18, which is on the lower side, indicating higher leverage and potential risks in meeting long-term obligations. Profitability ratios show a gross profit margin of 52.8% and a net profit margin of 12.7%, reflecting strong operational efficiency but also highlighting the need for improved cost management as evidenced by the relatively low net profit margin. Efficiency metrics like asset turnover (0.43) suggest underutilization of assets, while the interest coverage ratio is robust at 9.44, indicating sufficient earnings to cover interest expenses.
Evolution of Financial Ratios
Over the past five years, EMR’s financial ratios have shown mixed trends. While liquidity ratios exhibited a decline, profitability ratios have generally improved, suggesting a focus on enhancing operational efficiency despite liquidity challenges.
Distribution Policy
Emerson Electric Co. (EMR) has a dividend payout ratio of approximately 52%, reflecting a commitment to returning value to shareholders. The annual dividend yield stands at about 1.6%, while the company has consistently engaged in share buyback programs to enhance shareholder value. However, with a free cash flow coverage ratio of 0.86, there are potential risks tied to unsustainable distributions. Overall, this approach appears to support long-term value creation but warrants close monitoring for sustainability.
Sector Analysis
Emerson Electric Co. operates in the Industrial – Machinery sector, offering diverse automation and residential solutions. Its competitive advantages include a strong market presence, innovative technologies, and robust customer relationships.
Strategic Positioning
Emerson Electric Co. (ticker: EMR) holds a strong position in the industrial machinery sector, boasting a market cap of approximately $77.2B. The company specializes in automation and commercial solutions, providing a diverse array of products across various industries, including oil and gas, life sciences, and HVAC. Despite facing competitive pressure from other established players in the market, Emerson leverages advanced technology and innovation to maintain its market share. However, ongoing technological disruptions necessitate continuous adaptation to stay ahead in this dynamic landscape.
Revenue by Segment
The following chart illustrates Emerson Electric Co.’s revenue segmentation for the fiscal year 2025, highlighting the contributions from various business segments.
In FY 2025, Emerson’s revenue primarily stems from its Intelligent Devices segment, generating $12.4B, followed by Software and Control, contributing $5.691B. Notably, Intelligent Devices showed steady growth from $12.161B in FY 2024, while Software and Control also experienced an upward trend from $5.399B. This year, the overall revenue growth reflects strategic investments, though I remain cautious about potential margin pressures as the segments mature. The continued reliance on Intelligent Devices indicates a concentration risk that investors should monitor closely.
Key Products
Emerson Electric Co. offers a diverse range of products tailored to meet the needs of various industries. Below is a table summarizing some of their key products:
| Product | Description |
|---|---|
| Measurement and Analytical Instruments | Tools for precise measurement and data analysis in industrial settings, enhancing process control. |
| Industrial Valves | High-performance valves designed for critical applications in oil and gas, chemicals, and water management. |
| Process Control Software | Integrated software solutions that optimize manufacturing processes and improve operational efficiency. |
| Heating and Air Conditioning Systems | Comprehensive systems, including compressors and thermostats, for residential and commercial climate control. |
| Environmental Control Systems | Technologies for monitoring and managing environmental conditions in facilities to ensure compliance and efficiency. |
| Flow Control Devices | Precision devices that regulate flow in various applications, ensuring optimal performance and safety. |
| Energy Modeling Services | Consulting services to analyze energy usage and enhance efficiency in residential and commercial properties. |
These products are vital in supporting Emerson’s commitment to providing innovative solutions across multiple sectors, including industrial, commercial, and residential markets.
Main Competitors
The competitive landscape for Emerson Electric Co. includes several strong players in the industrial machinery sector, each with significant market capitalizations.
| Company | Market Cap |
|---|---|
| Parker-Hannifin Corporation | 112.42B |
| Waste Management, Inc. | 86.04B |
| United Parcel Service, Inc. | 80.49B |
| Northrop Grumman Corporation | 78.35B |
| Emerson Electric Co. | 77.19B |
| Howmet Aerospace Inc. | 76.87B |
| TransDigm Group Incorporated | 75.85B |
| Cintas Corporation | 75.36B |
| Johnson Controls International plc | 74.75B |
| Illinois Tool Works Inc. | 73.10B |
| Cummins Inc. | 70.30B |
These competitors operate primarily in the North American market, showcasing a robust landscape for industrial solutions and machinery.
Competitive Advantages
Emerson Electric Co. (EMR) leverages its extensive expertise in automation and residential solutions to maintain a competitive edge in the industrial machinery sector. With a market cap of $77.19B and continuous innovation in measurement technologies and HVAC systems, the company is well-positioned for growth. Future opportunities include expanding into emerging markets and developing smart technologies that cater to the increasing demand for energy efficiency and automation. These initiatives could enhance their product portfolio, driving further revenue growth and solidifying their market leadership.
SWOT Analysis
This SWOT analysis provides a strategic overview of Emerson Electric Co. (EMR) to help investors understand its current position and potential future directions.
Strengths
- Strong market presence
- Diverse product portfolio
- Established brand reputation
Weaknesses
- High operational costs
- Dependence on industrial sectors
- Limited international market penetration
Opportunities
- Growth in automation demand
- Expansion in emerging markets
- Advancements in technology
Threats
- Economic downturns
- Intense competition
- Regulatory changes
Overall, Emerson Electric Co. exhibits solid strengths that can be leveraged to capitalize on emerging opportunities. However, the company must address its weaknesses and monitor external threats to maintain its competitive edge and ensure sustainable growth.
Stock Analysis
Over the past year, Emerson Electric Co. (EMR) has demonstrated notable price movements, culminating in a strong bullish trend characterized by a significant percentage increase.
Trend Analysis
Analyzing EMR’s stock price over the past two years, I noted a remarkable price change of +44.82%. This indicates a bullish trend, although the acceleration status shows a deceleration in the price movement. The stock reached a high of $149.63 and a low of $93.98 during this period, with a standard deviation of 12.78 suggesting moderate volatility.
Volume Analysis
In the last three months, total trading volume for EMR amounted to approximately 1.67B, with buyer volume at 891.79M and seller volume at 766.62M, indicating a buyer-driven activity with a 53.38% dominance. The volume trend is increasing, which suggests positive investor sentiment and heightened market participation. In the recent period, buyer volume was 82.07M against seller volume of 80.53M, demonstrating a neutral buyer behavior with a slight edge in buying activity.
Analyst Opinions
Recent analyst recommendations for Emerson Electric Co. (EMR) highlight a cautious yet positive outlook. Analysts have assigned a “Buy” rating, with a consensus score of 3 out of 5. Key arguments from analysts include strong return on equity and assets, which suggest effective management and profitability. However, concerns regarding debt and valuation metrics like price-to-earnings and price-to-book ratios were noted. Overall, the consensus leans towards a “Buy” for 2025, indicating confidence in the company’s growth potential despite some risks.
Stock Grades
Emerson Electric Co. (EMR) has received several ratings from reputable grading companies, providing a clear view of its current market standing.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| JP Morgan | maintain | Neutral | 2025-11-10 |
| RBC Capital | maintain | Outperform | 2025-11-06 |
| Barclays | maintain | Equal Weight | 2025-11-06 |
| RBC Capital | maintain | Outperform | 2025-10-16 |
| JP Morgan | maintain | Neutral | 2025-10-15 |
| Wells Fargo | downgrade | Equal Weight | 2025-10-06 |
| Barclays | upgrade | Equal Weight | 2025-08-07 |
| Stephens & Co. | maintain | Equal Weight | 2025-07-16 |
| Citigroup | maintain | Buy | 2025-07-14 |
| Barclays | maintain | Underweight | 2025-07-09 |
Overall, the trend in grades for EMR indicates stability with several companies maintaining their previous ratings. Notably, RBC Capital continues to hold an “Outperform” rating, reflecting a positive outlook despite some recent downgrades from other firms.
Target Prices
The consensus target prices for Emerson Electric Co. (EMR) indicate a range of expectations among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 155 | 100 | 121.62 |
Analysts expect EMR to reach a consensus target price of approximately 121.62, reflecting a balanced outlook within a range from 100 to 155.
Consumer Opinions
Consumer sentiment about Emerson Electric Co. (EMR) reflects a mix of satisfaction and concerns, showcasing the company’s strengths and areas for improvement.
| Positive Reviews | Negative Reviews |
|---|---|
| “Reliable products that consistently meet our needs.” | “Customer service can be slow to respond to inquiries.” |
| “Innovative solutions that enhance operational efficiency.” | “Pricing is higher compared to competitors.” |
| “Excellent quality and durability of equipment.” | “Some products lack comprehensive user manuals.” |
Overall, consumer feedback on Emerson Electric Co. indicates strong appreciation for product reliability and innovation, while concerns about customer service responsiveness and pricing persist.
Risk Analysis
In evaluating Emerson Electric Co. (EMR), it’s crucial to consider the following risks that may affect its performance and your investment strategy.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in market demand and pricing. | High | High |
| Supply Chain | Disruptions in global supply chains affecting production. | Medium | High |
| Regulatory | Changes in regulations impacting operational costs. | Medium | Medium |
| Technological | Rapid technological advancements may require significant investment. | High | Medium |
| Competitive | Increased competition in the industrial automation sector. | High | Medium |
The most significant risks include market volatility and supply chain disruptions, both of which are prevalent in today’s economic climate. Investors should remain cautious and consider these factors while making decisions.
Should You Buy Emerson Electric Co.?
Emerson Electric Co. (EMR) demonstrates a positive net income of 2.293B and a net profit margin of 12.73%, indicating profitability. However, with a total debt of 13.759B and a debt-to-equity ratio of 0.646, the company carries a moderate level of debt. The fundamentals show a slight evolution in revenue from 17.492B in FY 2024 to 18.016B in FY 2025. The company holds a rating of B, suggesting a fair position in the market, but with a return on invested capital (ROIC) of 4.62% below the weighted average cost of capital (WACC) of 8.61%, it may imply value destruction.
Favorable signals
I have identified several favorable elements in the data for Emerson Electric Co. The company maintains a positive gross margin of 52.84%, which indicates efficient production and pricing strategies. Additionally, the gross profit growth stands at 7.14%, and the EBIT margin is positively positioned at 17.6%. The net margin is also favorable at 12.73%, along with a net margin growth of 13.13%. Furthermore, the EPS growth of 17.83% and an interest expense percentage of 1.32% contribute to the overall favorable assessment of the income statement.
Unfavorable signals
Conversely, there are notable unfavorable elements present in the data. The revenue growth is at a mere 3.0%, which is unfavorable and suggests stagnation. The ROIC is at 4.62%, which is below the WACC of 8.61%, indicating value destruction. Additionally, the price-to-earnings ratio stands at 32.42 and the price-to-book ratio is 3.66, both of which are unfavorable. The company’s current ratio is 0.88, and the quick ratio is 0.65, indicating potential liquidity issues.
Conclusion
Considering the favorable income statement evaluation and the unfavorable ratios evaluation, it might be prudent to wait for a more favorable situation. The overall bullish trend suggests positive momentum, but with recent seller volume slightly exceeding buyer volume, it may be wise to monitor the market for a return of buyers before making any investment decisions.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Why Is Emerson Electric (EMR) Up 3.9% Since Last Earnings Report? – Yahoo Finance (Dec 05, 2025)
- Guggenheim Capital LLC Trims Holdings in Emerson Electric Co. $EMR – MarketBeat (Dec 05, 2025)
- Emerson Electric (EMR): Evaluating Valuation as Firm Expands Role in Texas Solar Infrastructure – Sahm (Dec 02, 2025)
- Emerson Electric Co. $EMR Shares Purchased by Marshall Wace LLP – MarketBeat (Dec 05, 2025)
- Is Trending Stock Emerson Electric Co. (EMR) a Buy Now? – Yahoo Finance (Dec 02, 2025)
For more information about Emerson Electric Co., please visit the official website: emerson.com
