Emerson Electric Adds To Its Energy Portfolio


Emerson Electric ( EMR ) is the kind of company in which you likely use one of its products or services and wouldn't know it.

The firm got its start in 1890 making electric motors and fans. In 1897, it debuted the ceiling fan, making high-rise buildings livable. Ceiling fans soon became half the firm's business, according to Emerson's website .

Today, the St. Louis-based company operates on five platforms: process management, industrial automation, network power, climate technologies and commercial/residential solutions. It employs more than 130,000 people across 235 factories across the globe.

In the industrial automation sector alone, Emerson supplies products for power generation, electrical protection, power transmission, fluid automation, machine motion and other vital processes. Brands include ASCO, EasyHeat, Kop-Flex and SolaHD.

Acquisitions play a key part in Emerson's strategy. On Oct. 4, Emerson said it bought Enardo LLC, which makes safety and environmental control equipment for the energy, wastewater and refining markets. On Dec. 4, Emerson announced it will buy the remaining 44.5% stake of EGS Electrical Group that it doesn't already own.

Emerson's annual earnings have grown from $1.65 a share in fiscal 2000 (ended in September that year) to $3.54 in fiscal 2013. Emerson gets a 3-year stability factor of 3 on a scale of zero (stable) to 99 ( volatile).

Emerson has posted a 24.5% return on equity in fiscal 2013, helping to boost the SMR Rating to a B. Within the 31-member Diversified Operations group, only five other companies sport a higher ROE, includingDuPont ( DD ) (37.3% ROE) and3M ( MMM ) (27.1%).

Emerson scored modest revenue growth in six of the past seven quarters. The dividend yield is 2.6%, higher than the S&P 500's 2.4%. Three mutual funds rated A- or higher recently built new positions in the stock.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: DD , EMR , MMM

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