Emerson Electric (EMR) Stock Analysis
Emerson Electric Dividend
Current Dividend: $1.92
Dividend Yield: 3.1%
Cash Dividend Payout Ratio: 56%
Market Capitalization: 40 B
Enterprise Value: 41 B
Industry: Diversified Industrials
Emerson is a global diversified manufacturing and solutions company. EMR combines technology and engineering to help customers innovate to improve productivity and efficiency. The company serves the industrial, commercial and consumer markets through two new business platforms: Automation Solutions and Commercial & Residential Solutions.
Emerson has a long history of adapting to changing environments. Big changes are underway right now; shedding business (i.e. Network Power in 2016) and focusing businesses that fit their two new platforms.
EMR has a strong global presence (more that 150 countries) with a little more than one-half of EMR revenues coming from overseas. The company has a deep and varied product portfolio complemented by a stellar reputation and strong brand. It boasts a large “moat” in field instrument segments and asset management systems.
High research and development costs. EMR’s large customers have high bargaining power.
New technologies and obsolescence of older customers plants provide opportunities for substantial growth in developed nations. Expansion into new frontier markets.
There is intense competition in some of EMR’s business segments, particularly industrial automation. In addition, as a truly global company, they are subject to economic and political risks affiliated with foreign production facilities.
Dividend Analyzer Checklist
(updated December 2016)
Dividend Safety Score (19/33 points)
Dividend Per Share (ttm): $1.90
Dividend Payout Ratio (ttm): 75%
Dividend Per Share (10 Year Growth): 7.9%
Cash From Operations (CFO) Per Share (ttm): $4.45
CFO Dividend Coverage (CFO / DPS): 2.3 (2/6 points)
Free Cash Flow (FCF) Per Share (ttm): $3.76
FCF Dividend Coverage (FCF / DPS): 2.0 (4/6 points)
Net Financial Debt: $3464 M
Total Assets: $21743 M
Net Financial Debt / Total Assets: 16% (9/12 points)
Net Financial Debt to EBITDA (ttm): 228%
Total Liabilities to Assets Ratio (Qtr.): 65%
Piotroski Score (1-9) (TTM): (4/9 points)
Profitability & Growth Score (10/33 points)
Revenue (10 Year Growth) *CAGR > 4.14%: -3.0 (0/4 points)
EPS Basic Cont. Operations (10 Year Growth) CAGR > 4.14%: 0.9% (0/4 points)
Cash From Operations (10 Year Growth) CAGR > 4.14%: 1.4% (0/6 points)
Operating Earnings Yield (ttm): 7.4% (3/7 points)
Net Income (ttm): $1635 M
Gross Profit (ttm): $6262 M
Total Assets: $21743 M
Gross Profitability Ratio = GP / Total Assets: 29% (7/12 points)
Cash Return On Invested Capital (CROIC)(tttm): 16%
Return on Invested Capital (ROIC): 11%
Return on Invested Capital (ROIC) (5 Year Median): 13%
Return on Invested Capital (ROIC) (10 Year Median): 15%
Valuation Score (20/34 points)
Free Cash Flow Yield (ttm): 6.6% (7/9 points)
EV to EBIT (ttm): 15.9 (4/9 points)
EV to EBITDA (ttm): 12.9 (4/9 points)
PE10: 17.1 (5/7 points)
Price to Sales Ratio (ttm): 2.5
Price to Book Value (ttm): 4.8
Price to Earnings Ratio (P/E) (ttm): 22.5
TOTAL POINTS – (49/100) (50 is an average score)
*Compound Annual Growth Rate (CAGR)
**A Compound Annual Growth Rate of 4.14% = a 50% gain over 10 years.
Lastest Earnings Report: 11/01/2016
Estimated Next Earnings Report: 2/02/2017
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(updated December 2016)
Type of Investor / Recommendation
Large Diversified Dividend Portfolios / Can Be Considered
Looking For Exposure to Dividend Kings & Aristocrats / Excellent Choice
Looking For Exposure to Industrials Sector / Average Choice
Deep Value Investors / Watchlist
Emerson Electric (EMR) is ranked #121 (out of 245) overall and #36 (out of 57) in the Industrials Sector by the Dividend Analyzer.
The fact that EMR has increased dividends paid for 59 consecutive years, means the stock deserves some kind of premium. I’m concerned that premium is too high and not taking into account all the current risks.
A clearer successful turnaround OR a lower stock price would make EMR a more attractive buy.
Portfolio Position Disclosures:
DVB Dividend Kings & Aristocrats: Long
DVB Dividend Growth: Long
DVB High Income: None
Arbor Asset Allocation Model Portfolio (AAAMP): None
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