Emerson Looking Forward To Improving Process Markets

About a year ago, I was not that keen on Emerson Electric (NYSE:EMR) given what I saw as ongoing challenges in the core business and a management track record that left something to be desired. With the shares up less than 10% in that time versus 11% for the S&P 500, over 15% for Honeywell (NYSE:HON) and more than 35% for Rockwell (NYSE:ROK), at least some of that skepticism was valid. Then again, I also liked ABB (NYSE:ABB) better than Emerson, and ABB has barely squeaked out any gain, so I'm not exactly running a victory lap here.

Emerson looks priced for mid-to-high single-digit returns, which isn't bad given overall industrial valuations, and there is some potential that the recovery in end markets like oil/gas and chemicals could be stronger and that the non-residential HVAC cycle could last longer. The acquisition of Pentair's (NYSE:PNR) valve business was a logical if somewhat risky move and it should give the company a lot of opportunities to improve margins in the coming years. I'd be more excited about Emerson if it were cheaper, but then that's true of a lot of companies, and I think the company's long-term underperformance versus other automation companies like Honeywell, Rockwell, Siemens (OTCPK:SIEGY), and even ABB shouldn't be completely dismissed.

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Emerson Looking Forward To Improving Process Markets