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Emerson Electric Company (NYSE: EMR) is a diversified technology firm, providing electrical products and engineering services to industrial, commercial and consumer markets. Products include motors, appliances, tools and monitoring devices for controlling industrial plant operations, providing commercial and residential power and environmental control, and operating commercial refrigeration units. Competitors include General Electric (NYSE: GE) and Hitachi (NYSE: HIT).
The company pleased investors earlier in the month, when it reported fiscal Q4 EPS of 78 cents and revenues of $6.13 million. Analysts had been expecting 75 cents and $6.04 billion. Management also guided FY08 EPS to about $2.93-3.06 ($2.98 consensus) and FY08 revenues to about $24.15-24.83 billion ($24.03B consensus).
EMR shares popped on the news and have since been consolidating the gain in a bullish "flag" pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the shares with eight "strong buys", five "buys" and five "holds". The EMR Price to Sales ratio (1.87), Price to Free Cash Flow ratio (28.24), EPS Growth rate (25.81%), Return on Assets (11.14%), Return on Investment (15.78%) and Return on Equity (25.24%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 75% of the outstanding shares. The stock is one of these used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $41.26 and $56.70. A stop-loss of $47.75 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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