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Q4 Earnings Preview for Emerson Electric (NYSE:EMR)

in EARNINGS/INVESTING IDEAS by

Emerson Electric Co. (NYSE:EMR) is scheduled to report Q4 earnings results before markets open for trading on November 3, 2020.

The company is expected to report earnings of $0.94/share on revenue of $4.493 billion. The consensus earnings per share (EPS) of $0.94/share is based on a poll of 20 analysts and represents a decline in eps of −12.2% over the same quarter last year, when the company reported earnings of $1.07/share.

The revenue forecast of $4.493 billion based on a poll of 20 analysts implies a year-over-year (YoY) decline in revenue of −9.6%. Last year the company reported $4.971 billion in revenue for the quarter.

Expected to report EPS contraction of −12.2% for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $4,493.29 $4,971.00 −9.6%
EPS $0.94 $1.07 −12.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 3 out of the last 8 tracked quarters, missed 1 quarter, and met expectations 3 quarters.

What are your expectations from Emerson Electric Co. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 $0.59 $0.80 36.0% Beat
Q2, 2020 $0.75 $0.89 19.1% Beat
Q1, 2020 $0.67 $0.67 0.1% Met
Q4, 2019 $1.07 $1.07 0% Met
Q3, 2019 $0.94 $0.94 −0.1% Met
Q2, 2019 $0.84 $0.84 0.0% Met
Q1, 2019 $0.66 $0.74 12.0% Beat
Q4, 2018 $0.90 $0.89 −1.6% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 3.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $62.77 $64.69 3.1% Increase
April 21, 2020 $50.92 $52.11 2.3% Increase
February 4, 2020 $72.60 $76.01 4.7% Increase
November 5, 2019 $73.22 $73.60 0.5% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.88, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.88 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Emerson Electric Co. is currently trading at $65.37/share, down −2.3% for the day. The company is trading at approximately 83.4% of its 52-week high of $78.38/share. The company’s stock price is up 1.1% since the last earnings report and down −5.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 40.58 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:EMR Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 19.97 and a forward P/E multiple of 20.23.

Emerson Electric Co.’s current share price also implies a price-to-book (P/B) multiple of 5.00. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q3
Period End Date June 30, 2020
Stock Price (Current) $65.37
P/E Ratio 20.0x
P/E Ratio (Fwd) 20.2x
PEG Ratio −2.3
Total Debt / Total Capital 16.2%
Levered Free Cash Flow $2.53 billion
EV / EBITDA 12.5x

Finbox

Emerson Electric Co. is a large-cap stock with a market capitalization of $39.991 billion and a total enterprise value of $45.321 billion. The company operates in the Industrials sector and the Electrical Equipment industry.

Emerson Electric Co., a technology and engineering company, provides solutions to industrial, commercial, and consumer markets worldwide. It 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 the oil and gas, refining, chemicals and power generation, pharmaceuticals, 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 residential and variable speed 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 for use in medical, food processing, and cold storage applications. 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; temperature management and monitoring products for the foodservice markets; and professional and homeowner tools, and appliance solutions. The company was formerly known as The Emerson Electric Manufacturing Company and changed its name to Emerson Electric Co. in 2000. Emerson Electric Co. was founded in 1890 and is headquartered in St. Louis, Missouri.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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