Nervous investors have taken a weedwacker to the major indices as worries about interest rates, consumer spending, and the health of emerging markets have taken their toll. Industrial names like Rockwell Automation (ROK), ABB, Honeywell (HON), and General Electric (GE) have all gotten hit hard recently as investors have started to assume the worst about the economic cycle and cash in their chips after what has been at least in many cases an excellent two-year run.
With a solid mix of late-cycle businesses but recent difficulties meeting numbers and a management team that seems very nervous about the outlook for the next year, Emerson Electric (EMR) is smack in the middle of this. While Emerson's recent performance has not been fantastic, the valuation here is such that it is at least worth a second look.
Another Difficult Quarter
For three quarters in a row now, Emerson Electric has not done particularly well relative to analyst expectations. Emerson spooked the Street about a week ago with dour guidance, but results for the third quarter were not altogether terrible. Reported revenue growth rose 16%, while underlying organic growth was more on the order of 10%. Growth was led by the process management and industrial automation businesses, which each posted organic revenue growth in the teens. Climate and tools continue to drag along weakly (3% growth this time around), and network power was a disappointment with 7% organic revenue growth.
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Does Emerson Electric Deserve Its Discount?
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