Emerson Electric Co (EMR) stock analysis

P/E above its 5-year median

Emerson Electric's P/E of 34.9 is above its own 5-year median of 23.1.

P/E above the industry

Emerson Electric's P/E of 34.9 is above the Electronic and Other Electrical Equipment and Components, except Computer Equipment median of 32.5.

EV/EBITDA above its 5-year median

Emerson Electric's EV/EBITDA of 20.9 is above its 5-year median of 20.4.

P/B above the industry

Emerson Electric's price-to-book of 4.49 is above the Electronic and Other Electrical Equipment and Components, except Computer Equipment median of 3.01.

Trading above fair value

The share price of $167.06 is above our fair value estimate of $131.84.

Margin of safety under 20%

The price is 26.7% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 7.8% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -40.6% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 18.5% over the last twelve months, against a 5-year average of 3.2% a year.

Growing slower than the industry

Revenue grew 5.4% over the last twelve months; the Electronic and Other Electrical Equipment and Components, except Computer Equipment median is 12.4%.

Guidance issued

The latest outlook (2026 Q3 Underlying Sales Growth, May 5, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 53.4% over the last twelve months, against 52.8% a year earlier.

Return on equity under 15%

Return on equity was 13.1% over the last twelve months and averaged 30.1% over five years; we look for 15% on both.

Return on invested capital

Needs operating income and invested capital.

Return on equity above the industry

Emerson Electric's return on equity of 13.1% is above the Electronic and Other Electrical Equipment and Components, except Computer Equipment median of 0.4%.

Earnings grew over 5 years

Net income grew 3.2% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 14.2% over the last twelve months, against a 5-year average of 29.7%.

Net margin above the industry

Emerson Electric's net margin of 14.2% is above the Electronic and Other Electrical Equipment and Components, except Computer Equipment median of -0.2%.

High debt

Debt is 58.7% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 67.4% five years ago to 58.7%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 32.7% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets don't cover short-term debts

Current assets are 0.94 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.49; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Emerson Electric paid dividends worth 1.3% of the share price over the last twelve months.

Yield below Treasuries

The 1.3% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Emerson Electric yields 1.3%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 46.2% of net income.

Covered by free cash flow

Dividends take 35.2% of free cash flow.