At this point in the cycle, it’s pretty common for short-cycle industrials to slow and pass the baton on to companies with greater mid-to-late cycle exposure, and a process automation company like Emerson (EMR) fits that bill. On top of that, I like Emerson’s commitment to restructure around core secular growth opportunities, gradually shift away from oil/gas, and pursue long-term 30% incremental margin targets.
I was neutral on Emerson back in September largely on valuation (a bit on cycle timing too), and the shares are down about 10% since then, underperforming the larger industrial space, but holding up against other automation and HVAC/refrigeration names. While Russia’s invasion of Ukraine puts a great deal more macro risk on the table, and Emerson isn’t the cheapest industrial out there, I think the pieces are coming together to make this a more exciting idea now.
Click here to continue:
Emerson Looks Right - Right Place, Right Assets, Right Time, Right Valuation
No comments:
Post a Comment