Friday, January 29, 2016

Watch List: Emerson Electric

Good morning,

Today I'd like to turn my eyes towards the evaluation of EMR - Emerson Electric. I'll shortly evaluate the company and then summarize whether I think it'll make its way into my portfolio at some point.

Current Portfolio

GE - General Electric

T - AT&T

Consumer Staples:
WMT - Walmart

Consumer Discretionary:
GPS - Gap Inc.
YUM - Yum! Brands Inc.

Why EMR?

The portfolio is still in the beginning stages of growth and that means that the primary focus still needs to be to further diversify to solidify. In the current portfolio there is only one industrial stock in the portfolio - GE. This needs to be remedied sooner rather than later because of the strong base that industrial stocks bring to multiple portfolios.

Company Breakdown

EMR is primarily an industrial company that specializes in the manufacture, sale, and design of electrical products. The company is based out of St. Louis, Missouri and was founded in 1890. The focus of the company per their investor relations is to bring technology and engineering together to provide solutions that fit the the customer in a perfectly tailored way for that specific need. The company is broken down into five different parts: Process Management, Industrial Automation, Network Power, Climate Technologies, and Commercial/Residential Solutions.


EMR has a strong history of investor satisfaction. The EPS has raised 9.02% over the last five years and their dividend has grown an average of 7.01% per year as well. In addition to this, the company has a fair P/E ratio of only 11.13 as I write this post. This is well within the range of the portfolio's target 10-20 P/E. The company has also raised dividends for the past 59 years running which places it in the Dividend Aristocrats list. With an annual payout of $1.90 paid quarterly and a strong and fair dividend yield of 4.41% currently, the stock proves that it has a strong history of providing their shareholders with a historically supportive dividend payout.


As of 1/29/2016, EMR is trading at the price of $45.23/share. The 52 week range is $41.25-62.75 and it's P/E as discussed above is 11.13. With that being said, the ex-dividend date has not yet been released for the upcoming quarter but their payout ratio is solid at 62.3% which means they still have room to continue their payouts and raise them as necessary. Being at the low end of their 52 week range, it appears to be a solid buy for the price.


Emerson Electric is an extremely strong choice for an industrial stock. The company has years of solid numbers and continues to rise to the occasion due to the solid foundation that many industrial companies have. The price is right and the numbers are strong. As soon as my budget comes out at the end of this month, my investing cash for the month of January is going to go towards EMR as long as the stock price doesn't raise too much in the next week.

No comments:

Post a Comment