EMR - Emerson Has Rebuilt Itself And Is Poised To Leverage Multiple Long-Term Growth Trends
2024-07-04 08:15:11 ET
Summary
- Emerson Electric has undergone significant transformation toward long-term high-margin growth, with a clearer focus on automation and software-centric offerings to a wide range of industries.
- Short-cycle industrial end-markets have been challenging, but Emerson is cautiously optimistic about a rebound and seems to be gaining share in some markets.
- Opportunities in longer-cycle process industries/markets like LNG and hydrogen remain very attractive.
- Valuation is getting more stretched, but Emerson offers a compelling combination of good (and improving) margins and above-average revenue growth that can support some additional rerating.
There are restructurings and then there are frame-up rebuilds, and I would say Emerson Electric (EMR) is more the latter, with management keeping the core automation business, stripping away its network power and climate control businesses, and significantly augmenting that automation core with multiple deals. The company incurred dilution to do it, but the end result is a shiny new automation and software-centric company that is poised to leverage a long runway of automation, digitalization, and process transformation across multiple end-markets....
Emerson Has Rebuilt Itself And Is Poised To Leverage Multiple Long-Term Growth Trends