Emerson Transforming, But Is It Improving?

I haven't been a big fan of Emerson (NYSE:EMR) or its management team in recent years, and the stock's double-digit decline over the last three years does stand out next to the flattish performance of ABB (NYSE:ABB) and Siemens (OTCPK:SIEGY) and the stronger performance of Rockwell (NYSE:ROK) and Honeywell (NYSE:HON). All of these companies have been hurt to some degree by the sharp drop-off in process markets like oil/gas, power, mining/metals and chemicals, but Emerson has been hurt a little worse due to its overexposure to weak markets and some questionable execution from management.

With the sale of the Network Power business and part of the Industrial Automation business, the company certainly has some options to consider as it rethinks its future. Given some past poor decisions regarding M&A and an inability to meet past targets for growth and margin improvement, I think my skepticism toward management isn't unreasonable, and I think Emerson will struggle to replace what it has sold in terms of earnings/cash flow power. Emerson has done better than I thought it might since my last update (although it has still lagged ABB, Rockwell, Siemens, and Schneider (OTCPK:SBGSY)), but I'm just not comfortable with the valuation right now given the considerable challenges that remain.

Continue here:
Emerson Transforming, But Is It Improving?