Yahoo Finance Emerson (EMR) Displays Bright Prospects, Headwinds Persist
On Sep 14, we issued an updated research report on Emerson Electric Co. EMR.
In the past six months, this Zacks Rank #3 (Hold) stock has returned 44.6% compared with the industry’s growth of 47.9%.
Existing Business Scenario
Emerson has been experiencing strength across its several end markets like medical, life science, food and beverage, and power. Also, the company’s solid backlog level, which was $5.1 billion, exiting the third quarter of fiscal 2020 (ended Jun 30, 2020) at its Automation Solutions segment, is likely to support its revenues in the quarters ahead.
Also, Emerson’s acquisition of General Electric Company’s GE Intelligent Platforms business (closed in February 2019) has expanded its opportunities across process and discrete industries as well as hybrid markets including metals and mining, food and beverage, life sciences, and packaging. Moreover, the American Governor buyout (closed in April 2020) is likely to boost its offerings for its power customers. In addition, the company’s agreement to acquire Open Systems International (inked in August 2020) will strengthen its offerings under the Automation Solutions segment.
Moreover, strong cash flow position adds to Emerson’s strength. For instance, in the first nine months of fiscal 2020, the company successfully generated net cash of $1,854 million from operating activities, reflecting growth of 2.9% from the year-ago period. For fiscal 2020 (ending Sep 30, 2020) it anticipates operating cash flow of $2.8 billion and free cash flow of $2.25 billion.
However, a low demand environment on account of the coronavirus outbreak-led weakness across most end markets, particularly the North American upstream oil and gas space remains concerning in the short run. Notably, it anticipates overall demand to remain considerably weak in the quarters ahead. For fiscal 2020, Emerson anticipates an organic sales decline of 7.5-9% on a year-over-year basis against a 6% rise reported in the previous fiscal year.
Further, the company’s high debt level is a major concern. For instance, it had a long-term debt of $5,500 million exiting the third-quarter fiscal 2020, up 38.9% on a sequential basis.
Emerson Electric Co. Price and Consensus
Emerson Electric Co. price-consensus-chart | Emerson Electric Co. Quote
Key Picks
A couple of better-ranked stocks from the same space are ABB Ltd ABB and Enersys ENS. Both these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ABB delivered a positive earnings surprise of 100.00%, in the last reported quarter.
Enersys delivered a positive earnings surprise of 5.20%, on average, in the trailing four quarters.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Emerson Electric Co. (EMR) : Free Stock Analysis Report
ABB Ltd (ABB) : Free Stock Analysis Report
General Electric Company (GE) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
