Opinions
Christine Poole
Emerson Electric
EMR-N
BUY ON WEAKNESS
Oct 10, 2018
$73.350
Stock price when the opinion was issued
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A past pick from summer 2020 when we started turning the corner on the pandemic
It got a huge boost with vaccine news. They reported a great quarter last November and benefitted from the Democrats winning the Georgia Senate run-offs. A strong Chinese economy is another tailwind, because EMR has a lot of exposure there. Today, EMR made a new high. This has more room to run. A new CEO may break this company up, so he's excited.
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BUY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research
EMR has a total return of 33% over the last year and forward price-to-earnings ratio is decent, however not low at 20.8x. EMR also pays a small yield of 1.84%. Revenue growth has been modest over the last few years, however, margins have expanded nicely and most recent earnings were very strong. The balance sheet also looks OK with plenty of cash despite highly leveraged. We think EMR is a good name and forecasts predict a strong 2024. It appears to be quite a stable business, generating high cash flows and returns capital to shareholders well through the dividend and buybacks.
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Well-run. Maybe buy it during this pullback and she is certainly watching it. The U.S. has picked up oil demand, so Emerson's orders have grown.