EMR — Emerson Electric Co. | Market Street Journal

About this company

Free

Emerson Electric Co. is a global technology and software company that provides automation solutions. It helps process, hybrid, and discrete manufacturers optimize operations, enhance safety, reduce emissions, and achieve sustainability goals through its diverse portfolio of intelligent devices, control systems, and software.

Business segments

10-K

Final Control Measurement & Analytical Discrete Automation Safety & Productivity Control Systems & Software Test & Measurement

Earnings call: Q2 2026 2026

Intel

Free

May 05, 2026Optimistic

● Full transcript on file

Lal Karsanbhai (President and Chief Executive Officer), Ram Krishnan (Executive Vice President and Chief Operating Officer), Mike Baughman (Senior Vice President and Chief Financial Officer), Investors Relations Representative (Unspecified) (Vice President, Investor Relations)

Key metrics

For Q2 2026, net sales were $4.56 billion, up approximately 3% year over year, with underlying sales up about 0.5% and underlying orders up 5%. Pretax earnings were $793 million, with pretax margin expanding 320 basis points to 17.4%. Adjusted segment EBITA was approximately $1.26 billion, and earnings per share were reported at roughly $1.54 (non-

Forward guidance

Management updated its full-year 2026 outlook to reflect a more cautious top-line environment due to the conflict in the Middle East while maintaining a favorable margin and EPS profile. Full-year underlying sales growth was guided to low single digits, with adjusted EPS expected to grow mid- to high-single digits, supported by mix, pricing, and co

Notable Q&A

Analysts focused heavily on the revenue impact and recoverability of Middle East–related business, asking whether projects were delayed or permanently impaired; management responded that most exposure was schedule-related rather than structural and that the backlog remained intact, albeit with some

Surprise items

Despite headwinds from the Middle East conflict and only modest underlying sales growth, margins significantly exceeded expectations, leading to a notable EPS beat versus consensus. Management’s decision to maintain or slightly raise full-year EPS guidance, while acknowledging geopolitical and macro

Q2 FY2026 (May 05, 2026) · Confident Q1 FY2026 (Feb 05, 2026) · Optimistic

Fundamentals

Signal

52-week high / low

$165.15 / $122.64

Forward P/E

19.0×

Trailing 31.4×

Dividend

$2.22 / share

Yield 1.64%

Analysts covering

27

Avg target $163.76

Beta

1.24

vs. S&P 500

Short interest

2.1%

Float shorted

Buy

64%

Hold

29%

Sell

7%

Wall Street consensus — sourced weekly via public disclosures

Analyst coverage data sourced from public filings. Xavier analyst thesis summary available after weekly Perplexity scan completes.

Financial summary — Gemini analysis

Signal

Revenue

$18,016 million

3 % YoY

Operating margin

17.6%

Net income

$2,293 million

Free cash flow

$3,245 million

Dividend / share

$2.11

Total debt

$13,116 million

Cash: $1,544 million

CapEx guidance

$0.45 billion

Earnings quality: HIGH

Recurring revenue:10%

Cash conversion:1.6x

Non-recurring items: Acquisition/divestiture fees and related costs of $214 million, Restructuring costs of $136 million, Integration-related stock compensation expense of $35 million (AspenTech) and $12 million (NI)

Source: SEC 10-K filing analyzed by Gemini 2.5 Flash · 2025-11-10

Xavier's signal

NEUTRAL

Signal

Confidence 6.1 / 10 · 100% model agreement · Scheduled Jul 12, 2026

EMR trades at a TTM P/E of ~32x with only 0.5% underlying sales growth in Q2 2026, creating a valuation/growth mismatch that is hard to justify in the near term. While the forward P/E of ~19-22x looks more reasonable against FY2026 adjusted EPS guidance of $6.45-$6.55, the stock sits ~16% off its 52-week high and ~15% below consensus analyst targets, suggesting the market is already pricing in execution risk. With no near-term catalyst expected before the next earnings print and Deutsche Bank naming it a short-term sell idea in late June, risk/reward is balanced at best.

Strongest bull case

Emerson's long-cycle automation and AI-driven industrial software business (9% ACV growth, 5% underlying order growth in Q2) offers durable secular tailwinds, and the company's FY2028 targets of $21B in sales, 30% EBITA margin, and $8.00 EPS imply significant earnings re-rating potential if execution holds.

Strongest bear case

Q2 2026 underlying sales grew only 0.5% — heavily reliant on pricing (3.5 points) rather than volume — while operating cash flow fell 6% YoY, Middle East headwinds persist, and Wolfe Research just cut its price target to $167 from $171; the TTM P/E of 32x is difficult to sustain against decelerating organic growth and a neutral-to-bearish macro backdrop.

What the market may be missing

The market may be underweighting the divergence between reported EPS momentum (boosted by lower acquisition costs and pricing) and true organic volume weakness; if the second-half FY2026 recovery in underlying volumes disappoints — particularly in Discrete Automation or software renewal timing — consensus adjusted EPS estimates near the top of guidance ($6.55) could face downward revision heading into the August earnings print, compressing the multiple further.

Model breakdown

Signal

Atlas (Claude) — NEUTRAL

Meridian (GPT-4) — NEUTRAL

Grayline (Grok) — NEUTRAL

Vantage (Gemini) — NEUTRAL

msj100_EMR_20260712T003715Z

Peer comparison

Signal

EMR

current

$136.09 ▲0.5%

CAT

NEUTRAL

$952.41

UPS

NEUTRAL

$112.47

HON

NEUTRAL

$226.42

GE

NEUTRAL

$359.27

Recent SEC filings

Signal

LOG

4 — 2026-06-02

View filing on SEC EDGAR ↗

P2 AUTO

8-K — 2026-05-05

View filing on SEC EDGAR ↗

CEO scorecard — Lal Karsanbhai

Signal summary

Full detail Pro

LK

Lal Karsanbhai

President, Chief Executive Officer and Director · Emerson Electric Co.

CEO since 2021

Total compensation

$21,240,262 ▲ 5.7% YoY

Prior year: $20,096,283

Pay vs performance

Aligned

Board assessment

Say-on-pay approval

90%

Shareholder vote

Board independence

9/10 (90%)

Base salary$1,537,500

Bonus / incentive$3,728,525

Stock awards$15,413,325

CEO letter to shareholders

Signal

Full letter Pro

Lal Karsanbhai 2023 Annual Report OPTIMISTIC

Dear Fellow Shareholders,

In 2023, we continued to undertake strategic moves to further transform Emerson into a leading global automation company. At the same time, we focused on execution, exceeded our financial targets set at the beginning of the year and delivered value to shareholders, customers and employees.

We attribute these accomplishments to our Emerson Management System, a formula for driving operational execution and growth, balancing risk and innovation, and better allocating leaders' time and resources.

As we embark on fiscal 2024, with the majority of our strategic portfolio transformation complete, I can tell you with confidence our future will continue to be focused on and grounded in one collective commitment: execution. This is something for which Emerson has long been known and will continue to be a core characteristic of the company.

Driving Strong Financial Performance

Underlying Sales Growth 10%
Adjusted Segment EBITA Margin 25.0%
Adjusted Earnings Per Share $4.44
Free Cash Flow $2.4B

We drove excellent financial performance in 2023. Thanks to the work of our talented global team, each employee's embodiment of our Emerson Management System and our ongoing efforts to progress our portfolio transformation, we have continued to build a foundation for driving continued shareholder value and achieving our long-term financial targets. Looking ahead, I am confident we are well positioned to execute on our value creation opportunities.

Building A Higher-Growth, More Cohesive Automation Portfolio

As part of the continued reshaping of Emerson as a global automation leader, we made several bold portfolio moves in 2023, including the NI acquisition and the completion of the Copeland transaction.

Through these strategic decisions, the continued success of our AspenTech relationship, and the additions of Flexim and Afag, we have built a cohesive automation portfolio that enables customers to navigate the full automation spectrum and aligns with the secular growth drivers of digital transformation, energy security and affordability, sustainability and decarbonization and nearshoring.

NI Acquisition

Emerson took a definitive step in its portfolio transformation with the acquisition of NI and its test and measurement product and software offerings. By expanding into test and measurement, Emerson will enhance its automation capabilities and gain a broader set of customers in higher-growth discrete industries.

Enabling Innovation and Operational Excellence

Innovation has been a defining characteristic of Emerson's culture for 133 years. During the past year, thanks to our continuous commitment to innovation, we launched new products and offerings aligned to customer needs, positioned the business to transform the industries we serve and capitalize on key growth drivers like software growth and the energy transition, and secured the No. 33 ranking on Fortune Magazine's inaugural list of America's Most Innovative Companies.

Prioritizing Our People and Modernizing Our Culture

People are and always will be at the center of everything we do at Emerson, which is why I was excited to announce several strategic appointments to Emerson's Office of the Chief Executive throughout 2023, including Mike Baughman as Chief Financial Officer, Nick Piazza as Chief People Officer, Vidya Ramnath as Chief Marketing Officer and Peter Zornio as Chief Technology Officer. I want to take a moment to recognize the incredible contributions of Frank Dellaquila, who retired earlier this year after 13 years as our Chief Financial Officer.

When I first stepped into the role of CEO, I shared I was most excited about the people at Emerson and the opportunity to modernize our culture. Our commitment to our people has not changed and remains one of our highest priorities. This year, we introduced a new employee value proposition: Let's Go, which serves as an invitation to our current and potential employees to join our bold ambitions. We also launched Your Voice Counts, a new listening strategy to effectively understand employee sentiment.

While we still have work to do, supporting our people and empowering them to deliver results, investing in our culture and making Emerson a place everyone feels proud to work remains paramount.

Executing Now and Moving Forward

Our portfolio transformation, the Emerson Management System, and our outstanding people and culture constitute a strong foundation for driving value and differentiated operational execution now and moving forward.

Emerson is now positioned to drive accelerated growth as a leading global automation company and significant value creation for our shareholders.

Thank you for your ongoing trust and support of Emerson.

Sincerely,

Lal Karsanbhai
President and Chief Executive Officer

Xavier analysis

The CEO expresses clear confidence in the company's strategic transformation, financial performance, and future growth prospects, highlighting successful execution and a strong foundation.

Strategic themes by emphasis

#1Portfolio Transformation & Strategic Acquisitions/Divestitures

#2Operational Execution & Financial Performance

#3People & Culture / Human Capital

#4Innovation & R&D

10 named projects & initiatives

NI acquisition, Copeland transaction, AspenTech relationship, Flexim, Afag, Emerson Management System +4 more

5 other, 3 acquisition, 1 restructuring, 1 partnership

Forward-looking statements

6 total: 0 quantified, 6 directional, 0 vague

Capital allocation priority

Portfolio Transformation (M&A/Divestitures) → Organic Growth → Internal Investment (Human Capital & Culture)

Key quotes

“At Emerson, we believe in innovation built for and with our customers.”

States the core philosophy driving the company's product and solution development.

“Powered by our comprehensive, integrated automation portfolio and backed by our proven track record of execution, we are solving the unsolvable.”

Summarizes Emerson's value proposition and capabilities in the market.

View 2023 Annual Report (PDF) →

Executive compensation

Signal

Name	Title	Total compensation
Lal Karsanbhai	President and Chief Executive Officer	$21,240,262
Michael J. Baughman	Executive Vice President, Chief Financial Officer and Chief Accounting Officer	$5,672,669
Ram R. Krishnan	Executive Vice President and Chief Operating Officer	$9,036,825
Michael H. Train	Senior Vice President and Chief Sustainability Officer	$4,233,831
Michael Tang	Senior Vice President, Secretary and Chief Legal Officer	$3,731,259

Source: DEF 14A proxy statement · 2025-12-12

Governance

Pro

Dual-class shares: No

Poison pill: No

Clawback policy: Yes

Stock ownership req.: Yes

Shareholder proposals

Election of Directors

FOR

Pending

Advisory Vote on Executive Compensation

FOR

Pending

Ratification of Independent Registered Public Accounting Firm

FOR

Pending

Amendment to Restated Articles of Incorporation to Declassify the Company's Boar

FOR

Pending

Debt intelligence

Pro

9 debt instruments · 3 CUSIPs · 12 unique covenants

0.37x

Debt / Equity

0.8x

Net Debt / EBITDA

$5.8B

Net debt

18%

Debt / Assets

Credit facilities & debt instruments

Revolver $2,000,000,000

$2,000,000,000 364-DAY CREDIT AGREEMENT dated as of February 10, 2026

Matures 2027-02-09 · Filed 2026-02-13

Floating · SOFR | Prime | Fed Funds

Unsecured. Lenders represent they are not relying on 'margin stock' as collateral. Negative pledge covenant limits creation of Liens.

Bond €500,000,000

3.500% Note due 2037

Matures 2037-03-15 · Filed 2025-03-04

Fixed

unsecured

291011 BV5

Credit $3,000,000,000

364-DAY CREDIT AGREEMENT

Matures 2026-02-10 · Filed 2025-02-14

Floating · SOFR | Prime | NYFRB Rate

Unsecured. The Lenders represent they are not relying on 'margin stock' as collateral, and the agreement includes a negative pledge covenant.

Revolver $3,500,000,000

$3,500,000,000 Credit Agreement dated as of February 17, 2023

Matures 2028-02-17 · Filed 2023-02-21

Unsecured, except for a security interest granted to the Agent in the Facility LC Collateral Account (funds on deposit) for the benefit of Lenders and LC Issuers to secure LC Obligations, upon the request of the Agent or Required Lenders during an Event of Default.

Bond $1,000,000,000

2.800% Notes due 2051

Matures 2051-12-21 · Filed 2021-12-21

Fixed

unsecured

291011 BS2

Bond $1,000,000,000

2.200% Notes due 2031

Matures 2031-12-21 · Filed 2021-12-09

Fixed

Unsecured

291011 BR4

3 additional agreements on file

Financial covenants

Limitation on Liens (General Basket)

not to exceed 25% of Consolidated Total Assets

Aggregate principal or face amount of obligations secured by Liens not otherwise permitted

$2,000,000,000 364-DAY CREDIT AGREEMENT dated as o

Maximum Liens for Derivatives Obligations

≤ $300,000,000

Aggregate amount of assets subject to Liens securing Derivatives Obligations

364-DAY CREDIT AGREEMENT

Maximum Permitted Liens (other)

≤ 25% of Consolidated Total Assets

Aggregate principal or face amount of obligations secured by Liens not otherwise permitted by Section 5.08(a)-(h)

364-DAY CREDIT AGREEMENT

Limitation on Liens

not to exceed 25% of Consolidated Total Assets

Aggregate principal or face amount of obligations secured by Liens not otherwise permitted

$3,500,000,000 Credit Agreement dated as of Februa

Aggregate Outstanding Credit Exposure Threshold

≤ 105%

Dollar Amount of Aggregate Outstanding Credit Exposure / Aggregate Commitment

CREDIT AGREEMENT

Limitation on Liens for Derivatives Obligations

≤ $300,000,000

Aggregate amount of assets subject to Liens securing Derivatives Obligations

CREDIT AGREEMENT

Limitation on Other Liens

≤ 25% of Consolidated Total Assets

Aggregate principal or face amount of Liens not otherwise permitted

CREDIT AGREEMENT

Maximum Aggregate Outstanding Credit Exposure (Mandatory Prepayment Trigger)

> 1.05x

Dollar Amount of Aggregate Outstanding Credit Exposure / Aggregate Commitment

CREDIT AGREEMENT

4 additional covenants on file

CUSIP identifiers (3 on file)

291011BL7 291011BN3 291011BM5

Cross-default risk

5 agreements contain cross-default provisions — a covenant breach on one facility may trigger default on others.

Xavier risk radar

Pro

Covenant headroom

Low leverage — no covenants required

Earnings quality

High quality (cash conversion 1.6x)

Risk trend

Risk increasing — The Company's reliance on strategic acquisitions and divestitures carries signif

Mgmt narrative

Management tone: Cautiously optimistic

Analyst drift

Consensus Buy — targets stable

Insider sentiment

Pattern detection — 90 days needed

Signal history

Signal

Date	Direction	Conf.	Agree.	Thesis	Price	Type
Jul 12, 2026	NEUTRAL	6.1/10	100%	EMR trades at a TTM P/E of ~32x with only 0.5% underlying sales growth in Q2 2026, creating a valuat...	$138.88	Sched.
Jul 11, 2026	NEUTRAL	6.5/10	75%	EMR screens as fully valued for a 5-day horizon: the trailing P/E above 30x is rich versus industria...	$138.88	Sched.
Jun 07, 2026	NEUTRAL	6.3/10	100%	EMR trades at ~32x TTM P/E — stretched for a low-single-digit revenue grower — while the forward P/E...	$138.12	Sched.
May 31, 2026	NEUTRAL	6.3/10	75%	EMR has re-rated higher since its May 5 Q2 2026 beat-and-raise, but at 33x TTM P/E with only ~3% rep...	$143.82	Sched.
May 24, 2026	NEUTRAL	5.9/10	100%	EMR is fairly valued post-earnings with the Q2 beat already absorbed into the stock price — the EPS ...	$136.42	Sched.
May 17, 2026	NEUTRAL	5.9/10	75%	EMR has just digested its Q2 2026 earnings beat (EPS $1.54 vs. $1.53 est.) and guidance raise, and t...	$133.05	Sched.
May 10, 2026	NEUTRAL	6.2/10	75%	EMR just reported Q2 FY2026 results (May 5) with a slight revenue miss and a sales guidance cut to 3...	$141.31	Sched.
May 03, 2026	NEUTRAL	6.2/10	100%	EMR faces a binary event risk with Q2 FY2026 earnings dropping after market close on May 5 — just 2 ...	$137.45	Sched.
Apr 12, 2026	BULLISH	6.5/10	75%	EMR is trading roughly 13% below its 52-week high and approximately 12% below the consensus analyst ...	$143.77	Sched.

Showing last 9 signals

EMR Emerson Electric Co.

Signal

FY2026 annual report (10-K filed 2025-11-10)

INCOME STATEMENT

? Revenue

$18,016 million 3 % YoY

? Operating income

$3,171 million

? Net income

$2,293 million

? Free cash flow

$3,245 million

? Dividend per share

$2.11

BALANCE SHEET

? Total assets

$42.1B

? Cash & equivalents

$1,544 million

? Total debt

$13,116 million

? Shares outstanding

566.7 million shares

? Debt-to-equity ratio

0.4%

CASH FLOW

? Operating cash flow

$1.5B

? Capital expenditure

$182M

? Free cash flow

$1.3B

? Depreciation & amortization

$369M

EARNINGS QUALITY

? Accrual quality

HIGH

? Recurring revenue

10%

? Cash conversion

1.6x

? Non-recurring items

3 identified

? Management tone

Cautious Optimistic

? Top risk factor

Increasing

Click any row to expand the plain-English explanation. Source: SEC EDGAR XBRL filings.

Capital intelligence

Signal

Weighted Average Cost of Capital · Return on Invested Capital · Economic Value Added

ROIC

8.68%

WACC

10.48%

🔴 VALUE DESTROYER — EVA Spread: -1.80%

? WACC

10.48%

? Cost of equity

11.09%

? Cost of debt (after-tax)

4.29%

? Capital structure

E: 90.98% / D: 9.02%

? ROIC

8.68%

? EVA

-$473M

? NOPAT

$2.3B

Risk-free rate: 4.25% (10Y Treasury) · Equity risk premium: 5.50% · Sources: total_debt: XBRL, operating_income: XBRL TTM (4Q sum), invested_capital: Equity + Debt - Cash