Emerson (EMR) Q4 Earnings Beat, Soar Y/Y on Higher Revenues
Emerson Electric Co. EMR reported fourth-quarter fiscal 2022 (ended Sep 30, 2022) adjusted earnings of $1.53 per share, which outperformed the Zacks Consensus Estimate of $1.39. This compares with our estimate of $1.38. The bottom line improved by double digits in the reported quarter. Results benefited from continued automation demand and a robust backlog level.
Emerson’s net sales of $5,360 million surpassed the Zacks Consensus Estimate of $5,355 million. This compares with our estimate of $5,351.6 million. The top line increased 8% year over year. Underlying sales were up 12%.
Segmental Details
Automation Solutions’ net sales came in at $3,307 million, increasing 7% year over year. This compares with the Zacks Consensus Estimate of $3,338 million. Our estimate for the quarter was $3,351.7 million. Underlying sales of the segment increased 13%.
Commercial & Residential Solutions generated net sales of $1,803 million in the fiscal fourth quarter, up 2% year over year. This compares with the Zacks Consensus Estimate of $1,890 million. Our estimate for the quarter was $1,899.8 million. Underlying sales were up 10%. AspenTech generated net sales of $251 million in the quarter. This compares with the Zacks Consensus Estimate of $195 million. Our estimate for the quarter was $133.2 million.
Emerson Electric Co. Price and Consensus
Emerson Electric Co. price-consensus-chart | Emerson Electric Co. Quote
Margin Details
In the quarter under review, Emerson's cost of sales increased 3.1% year over year to $3,043 million. The pretax margin in the quarter was 16.9% compared with 16.7% in the year-ago period. Adjusted EBITA margin came in at 23.3% compared with 20.7% in the year-ago quarter. Selling, general and administrative expenses increased 7.8% to $1,136 million.
Balance Sheet and Cash Flow
Exiting fourth-quarter fiscal 2022, Emerson had cash and cash equivalents of $1,804 million compared with $2,354 million in the year-ago quarter. Long-term debt was $8,259 million compared with $ 5,793 million in the year-ago period. In 2022, the company repaid debts of $522 million.
In fiscal 2022, the company generated net cash of $2,922 million from operating activities, reflecting a decrease of 18.3% from the year-ago period. Capital expenditure was $531 million, down from $581 million in the year-ago period.
In fiscal 2022, the company paid out dividends of $1,223 million and repurchased shares worth $500 million.
Fiscal 2023 Outlook
Emerson will report financial results for Climate Technologies, InSinkErator and Therm O Disc as discontinued operations beginning in 2023, following the announcement of its Climate Technologies divestiture. The company expects earnings from discontinued operations for 2023 to be $10-$11 billion or $17-$19 per share, including the net gains on 2023 divestitures.
Emerson anticipates net sales growth of 7-9% year over year in fiscal 2023. Underlying sales are expected to rise 6.5-8.5% in the year.
EMR anticipates earnings per share of $3.51-$3.66 for fiscal 2022. Adjusted earnings per share are estimated to be $4.00–$4.15 per share. Free cash flow conversion is predicted to be approximately 100%. EMR expects to pay a dividend of approximately $1.2 billion and to buy back shares worth approximately $2 billion in fiscal 2023.
For the fiscal first quarter of 2023, Emerson anticipates net sales growth of 6-8% and Underlying Sales Growth of 6-8%, year over year. Adjusted EPS is anticipated to be 85-89 cents per share.
Zacks Rank & Stocks to Consider
EMR currently carries a Zacks Rank 3 (Hold).
Some better-ranked companies from Industrial products sector are discussed below.
Enerpac Tool Group Corp. EPAC delivered an average four-quarter earnings surprise of 3.4%. EPAC presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
EPAC’s earnings estimates have increased 9.1% for fiscal 2023 (ending August 2023) in the past 60 days. The company’s shares have gained 24.1% in the past six months.
iRobot Corporation IRBT presently has a Zacks Rank of 2 (Buy). IRBT’s earnings surprise in the last four quarters was 59.1%, on average.
In the past 60 days, iRobot’s earnings estimates have increased 0.1% for 2022. The stock has rallied 6.5% in the past six months.
Reliance Steel & Aluminum Co. RS presently carries a Zacks Rank of 2. Its earnings surprise in the last four quarters was 13.6%, on average.
In the past 60 days, RS’s earnings estimates have increased 0.1% for 2022. The stock has popped up 0.9% in the past six months.
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