Emerson Electric Co. (NYSE:EMR) has managed to impress investors with its recent growth momentum driven by favorable trends in most of its process and hybrid end markets.
Shares of this Zacks Rank #2 (Buy) company have gained 25.8% compared with the industry’s growth of 25.1% over the past six months.
What Makes Emerson an Attractive Option?
Emerson is well positioned to benefit from solid growth in its long cycle businesses, supported by strength across final control and systems businesses. In addition, the company’s robust backlog level at the Automation Solutions segment and increased bookings for several large liquefied natural gas projects are likely to boost its revenues. Notably, at the end of the first quarter of fiscal 2020 (ended Dec 31, 2019), the segment’s backlog increased 7% to about $5 billion on a sequential basis.
Also, in February 2019, Emerson completed the acquisition of Intelligent Platforms from General Electric Company (NYSE:GE) . The addition of Intelligent Platforms business has been expanding Emerson’s opportunities across process and discrete industries as well as hybrid markets. Notably, acquired assets boosted its sales by 1% in both the fourth quarter of fiscal 2019 (ended Sep 30, 2019) and first quarter of fiscal 2020.
Moreover, Emerson remains highly committed toward increasing shareholders’ wealth through share repurchase programs and dividends. In this regard, it repurchased shares worth $129 million in fiscal first quarter apart from dividend disbursement of $305 million. It is worth noting that in November 2019, the company hiked annual dividend rate by 4 cents for fiscal 2020 (ending September 2020). For fiscal 2020, the company anticipates operating cash flow of $3.15 billion and free cash flow of $2.5 billion. In addition, it intends to repurchase $1,500 million of shares in fiscal 2020, higher than $1,250 million in fiscal 2019 (ended September 2019).
In addition, Emerson’s earnings estimates have been trending north over the past seven days, with four upward estimate revisions for fiscal 2020. The Zacks Consensus Estimate for fiscal 2020 has been revised upward from $3.63 to $3.66 over the past seven days. In addition, the consensus estimate for fiscal 2021 (ending September 2021) has been revised upward from $4.00 to $4.03 over the same time frame.
Other Stocks to Consider
A couple of other top-ranked stocks from the same space are SPX FLOW, Inc. (NYSE:FLOW) and Regal Beloit Corporation (NYSE:RBC) . While SPX FLOW currently sports a Zacks Rank #1 (Strong Buy), Regal Beloit carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
SPX FLOW delivered positive earnings surprise of 6.95%, on average, in the trailing four quarters.
Regal Beloit’s positive earnings surprise in the last reported quarter was 0.81%.
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Emerson Electric Co. (EMR): Free Stock Analysis Report
Regal Beloit Corporation (RBC): Free Stock Analysis Report
General Electric Company (GE): Free Stock Analysis Report
SPX FLOW, Inc. (FLOW): Free Stock Analysis Report
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