Why Emerson Electric Shares Are Gaining Today

  • Emerson Electric Co EMR shares are up Wednesday morning following its Street-beating second quarter results.
  • EMR reported second-quarter FY23 net sales growth of 14% year-over-year to $3.76 billion, beating the consensus of $3.65 billion.
  • Q2 Underlying sales were up 14%, and underlying orders were up 7%.
  • Adjusted EPS improved 25% Y/Y to $1.09, beating the consensus of $0.97.
  • Earnings from continuing operations increased 18% Y/Y to $505 million.
  • Emerson's cash provided by operating activities year-to-date totaled $486 million, compared to $965 million in 2Q22. 
  • Q2 Operating cash flow was $575 million, up 51% Y/Y, and adjusted free cash flow was $513 million.
  • Sales by Segments: Final Control $992 million (+12% Y/Y), Measurement & Analytical $888 million (+15% Y/Y), Discrete Automation $683 million (+6% Y/Y); Safety & Productivity $361 million (+2% Y/Y), Control Systems & Software $623 million (+9% Y/Y), and AspenTech $230 million (+172% Y/Y).
  • Adjusted Total Segment EBITA was $924 million (+31.4% Y/Y), and the margin improved to 24.6% from 21.4% in 2Q22.
  • Also ReadEmerson Electric Acquires National Instruments For $8.2B
  • EMR held cash and equivalents of $2.05 billion as of March 31, 2023.
  • "Emerson's outstanding second quarter results were driven by strong end market demand and excellent operational execution from our global teams," commented Emerson President and Chief Executive Officer Lal Karsanbhai.
  • Management: EMR announced the promotion of Mike Baughman, vice president, controller, and chief accounting officer, to executive vice president and chief financial officer, effective May 10. 
  • Baughman succeeds Frank Dellaquila, who will retire after 32 years with the company.
  • 3Q23 Outlook: Emerson expects net sales growth of 10.5%-12.5%, with underlying sales growth of 10% - 12%. It sees Adjusted EPS of $1.07 - $1.11 versus $1.07 consensus.
  • FY23 Outlook, raised: Emerson Electric expects net sales growth of 9%-10.5% (prior expectation 8%-10%), with underlying sales growth of 8.5%-10% (prior 6.5%-8.5%).
  • It expects an adjusted EPS of $4.15-$4.25 (prior $4.00-$4.15) versus the consensus of $4.07. Operating Cash Flow of $2.5 billion and FCF of $2.2 billion.
  • Price Action: EMR shares are trading higher by 5.45% at $86.70 on the last check Wednesday.
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