Emerson Electric: Earnings Preview

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 |  About: Emerson Electric Co. (EMR)
by: Zacks Investment Research

Emerson Electric Company (NYSE:EMR) is scheduled to report its first quarter 2012 results on Tuesday February 7, 2012. The current Zacks Consensus Estimate for the quarter is 50 cents a share. For the quarter under review, revenue is $526 million, according to the Zacks Consensus Estimate.

Fourth-Quarter 2011, a Synopsis

Emerson Electric Company reported fourth-quarter fiscal 2011 earnings per share from continuing operations of 98 cents, a penny above the Zacks Consensus Estimate of 97 cents.

Total revenue was $6.5 billion, an increase of 12% year over year. Underlying sales remained strong and increased 9%, currency added 2% and acquisitions added 1%. International underlying sales grew 13%, with 13% in Asia, 10% in Europe, 22% in Latin America and 13% in the Middle East/Africa. The U.S. business reflected slower underlying sales growth at 3% versus the prior year quarter, as the U.S. economy has shifted to a much lower growth environment.

Third-Quarter 2011 Zacks Consensus

The analysts considered by Zacks, expect Emerson to post first-quarter 2012 earnings of 50 cents a share. The current Zacks Consensus Estimate reflects a decrease of 20.0% from the prior-year quarter’s earnings. The current Zacks Consensus Estimate for the quarter ranges between 48 cents and 54 cents a share.

Zacks Agreement & Magnitude

Among the analysts following the stock, none of the analysts have changed their estimates in the last 7 days. However, in the last 30 days 3 of the 17 analysts covering the stock have lowered their estimates for the current quarter while 4 have lowered it for the full fiscal 2012. Therefore, the Zacks Consensus Estimate has been lowered from 54 cents to 50 cents in the last 30 days.

Since November 2011, the company has been witnessing weak order growth due to the continued weakness in Network Power and disruptions in Thailand supply chain due to floods.

Further, in the last reported quarter the company had given a cautious outlook for fiscal 2012, as the macroeconomic outlook remains mixed and is subject to ongoing uncertainty. The company expects a slow and uneven growth. In addition, the outlook for Europe is also not very exciting as it has entered a recessionary growth period.

Mixed Earnings Surprise History

With respect to earnings surprises, Emerson has reported above the Zacks Consensus Estimate just once in the trailing four quarters. In rest of the three quarters, the company reported below the Zacks Consensus. The average remained at negative 1.57%. This suggests that Emerson has reported below the Zacks Consensus Estimate by an average of negative 1.57% in the trailing four quarters.

Zacks Rank

The company primarily competes with ABB Ltd. (NYSE:ABB) and currently holds a Zacks Rank #4 which implies a short-term ‘Sell’ on the stock.

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