Companies in the Diversified Operations group are often tied
to the world economy.
Emerson Electric (
) fits that category. The company has 235 manufacturing locations
worldwide, offering products for industrial, commercial and
The company has five business segments -- process management,
industrial automation, network power, climate technologies and
In recessionary fiscal 2009, revenue dropped 19%. (The fiscal
year ends in September.) The company rebounded with the economy,
growing sales 5%, 15%, 1% and 1% in fiscal 2010-13. Perhaps that
doesn't sound like much of a recovery, but that's pretty much in
step with the hesitant recovery worldwide.
Earnings grew 6% and 8% on a year-ago basis in the past two
quarters. Revenue advanced 2% and 1%.
Pretax margin was 15% in each of the past three years, above
the previous six-year period's 12% to 14% range.
The company has taken some steps to help margins. In February
2012, CEO David Farr talked about a four-year realignment plan
that would dump sluggish units totaling $2 billion to $3 billion
of annual sales.
In September 2012, the company sold its Knaack unit, a van and
truck storage business, for $115 million.
Last November, the company completed the sale of a majority
stake in its embedded computer and power business to Platinum
Equity, a private equity firm, for about $300 million.
Macquarie Research analyst Mike Wood said at the time that the
unit had become commoditized, Reuters reported.
One thing that hasn't changed is Emerson's dividend policy.
The company has increased its dividend 57 years in a row. The
quarterly payout of 43 cents a share represents an annualized
yield of 2.6%.