NYSE:EMR
EMERSON ELECTRIC CO
A premier global provider of automation, controls, and engineered solutions powering critical industries like energy, food and beverage, and healthcare.
Key Metrics
Investment Thesis
Bull Case
Emerson offers a compelling value play for long-term investors seeking exposure to essential industrial infrastructure with predictable recurring revenue from its installed base and service contracts. The company's ability to generate robust operating cash flow of $3.10B while maintaining a strong dividend yield and share repurchase program provides a defensive floor even if macroeconomic conditions deteriorate.
Bear Case
Valuation concerns persist given the substantial accumulated deficit and significant non-cash charges like amortization, which could mask underlying earnings quality compared to pure-play peers. Additionally, the heavy reliance on goodwill of $18.19B creates vulnerability to impairment charges during economic stress, and the large negative net change in cash of $2.04B suggests aggressive capital allocation that may limit financial flexibility.
About EMERSON ELECTRIC CO
Emerson Electric Co. is a global leader in industrial automation, controls, and commercial & residential solutions serving critical infrastructure sectors including oil and gas, energy, water, food and beverage, and healthcare. The company leverages its extensive portfolio of products and services to help customers optimize operations, enhance sustainability, and improve safety across diverse markets worldwide. With a robust balance sheet characterized by significant goodwill from strategic acquisitions and strong operating cash flows, Emerson continues to invest in innovation while returning capital to shareholders.
Analysis
Management Discussion
Recent financial performance demonstrates resilience with revenue growing to $18.02B in 2025 following a strong year in 2024, while net income stabilized at $2.25B after a higher base in previous periods. The company successfully generated $3.10B in operating cash flow and returned over $2.36B to shareholders through dividends and buybacks, though the net change in cash was negative due to significant financing outflows related to debt issuances and repurchases.
Industry Overview
The industrial automation and controls industry is experiencing a transition toward digitalization and sustainability-focused solutions, driving demand for Emerson's advanced process control systems and network power products. As industries like energy and manufacturing prioritize efficiency and carbon reduction, the market favors established players with comprehensive portfolios capable of offering integrated software and hardware solutions.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $15.16B | $17.49B | $18.02B |
| Cost of Revenue | $7.74B | $8.61B | $8.50B |
| Gross Profit | $7.43B | $8.88B | $9.52B |
| Operating Expenses | $4.70B | $6.87B | $6.58B |
| Operating Income | $2.73B | $2.02B | $2.93B |
| R&D | $523.0M | $781.0M | $771.0M |
| G&A | $4.19B | $5.14B | $5.10B |
| Stock-Based Comp | $250.0M | $260.0M | $263.0M |
| D&A | $1.05B | $1.69B | $1.52B |
| Depreciation | $287.0M | $323.0M | $344.0M |
| Amortization | $764.0M | $1.37B | $1.17B |
| Other OpEx | $-8.0M | $942.0M | $711.0M |
| Non-Operating Income | $0 | $0 | $0 |
| Interest Income | $227.0M | $148.0M | $150.0M |
| Pre-Tax Income | $2.73B | $2.02B | $2.93B |
| Income Tax | $599.0M | $415.0M | $696.0M |
| Continuing Ops | $2.13B | $1.60B | $2.24B |
| Discontinued Ops | $11.07B | $350.0M | $8.0M |
| Net Income | $13.20B | $1.96B | $2.25B |
| Minority Interest | $-19.0M | $-13.0M | $-47.0M |
| Net to Common | $13.22B | $1.97B | $2.29B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $13.82B | $10.19B | $8.58B |
| Accounts Receivable | $2.52B | $2.93B | $3.10B |
| Inventory | $2.01B | $2.18B | $2.21B |
| Other Current Assets | $9.29B | $5.08B | $3.27B |
| Long-Term Assets | $28.93B | $34.05B | $33.38B |
| PP&E (Net) | $2.36B | $2.81B | $2.87B |
| Intangibles | $6.26B | $10.44B | $9.46B |
| Goodwill | $14.48B | $18.07B | $18.19B |
| Operating Leases | $550.0M | $692.0M | $637.0M |
| Other LT Assets | $5.27B | $2.05B | $2.22B |
| Total Assets | $42.75B | $44.25B | $41.96B |
| Current Liabilities | $5.03B | $5.74B | $9.80B |
| Accounts Payable | $1.27B | $1.33B | $1.38B |
| Current Debt | $546.0M | $532.0M | $605.0M |
| Current Leases | $144.0M | $158.0M | $138.0M |
| Deferred Revenue | — | $1.04B | $1.03B |
| Taxes Payable | — | — | $130.0M |
| Other Current Liab | $-143.0M | $-1.20B | $2.89B |
| Long-Term Liabilities | $11.12B | $10.99B | $11.87B |
| Long-Term Debt | $7.61B | $7.16B | $8.32B |
| LT Operating Leases | $404.0M | $511.0M | $505.0M |
| Other LT Liab | $3.10B | $3.33B | $-1.15B |
| Total Liabilities | $16.15B | $16.74B | $21.67B |
| Shareholders' Equity | $26.60B | $27.51B | $20.30B |
| Paid-In Capital | $62.0M | $169.0M | $85.0M |
| Retained Earnings | $40.07B | $40.83B | $40.60B |
| AOCI | $-1.25B | $-868.0M | $-821.0M |
| Treasury Stock | $18.67B | $18.97B | — |
| Total L&E | $42.75B | $44.25B | $41.96B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $13.20B | $1.96B | $2.25B |
| Non-Cash Adjustments | $-13.27B | $1.12B | $204.0M |
| Working Capital Changes | $704.0M | $252.0M | $648.0M |
| Cash from Operations | $637.0M | $3.33B | $3.10B |
| Capital Expenditures | $363.0M | $419.0M | $431.0M |
| Cash from Investing | $12.41B | $-5.36B | $-593.0M |
| Debt Issuances | $0 | $0 | $1.54B |
| Debt Repayments | $741.0M | $547.0M | $503.0M |
| Share Buybacks | $2.00B | $435.0M | $1.17B |
| Dividends Paid | $1.20B | $1.20B | $1.19B |
| Cash from Financing | $-6.82B | $-2.46B | $-4.51B |
| FX Effect | $18.0M | $20.0M | $-39.0M |
| Net Change in Cash | $6.25B | $-4.46B | $-2.04B |
| Beginning Cash | $1.80B | $8.05B | $3.59B |
| Ending Cash | $8.05B | $3.59B | $1.54B |
Frequently Asked Questions
How does EMERSON ELECTRIC CO make money?
The company generates revenue primarily through its Automation segment which includes industrial control systems for process industries, the Commercial & Residential (C&R) segment offering HVACR products and services, and the Network Power segment providing power management solutions for data centers and commercial buildings.
What are the main risks for EMR?
Investors should consider the risk of slowing global economic growth impacting discretionary capital spending in industrial automation, potential supply chain disruptions affecting inventory management given current receivables levels, currency fluctuation impacts on international earnings as evidenced by negative FX effects on cash, and the execution risk associated with integrating acquisitions into existing operations.
What is EMR's competitive advantage?
Emerson benefits from a massive installed base of proprietary software and hardware that creates high switching costs for enterprise clients, a diversified revenue stream across multiple non-discretionary end-markets that provides stability during economic downturns, and a strong balance sheet with over $3 billion in cash flow from operations supporting continuous R&D investment.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.