Markets

Emerson (EMR) Misses Q4 Earnings on Macroeconomic Issues (Revised)

Emerson Electric CompanyEMR reported fourth-quarter fiscal 2015 adjusted earnings per share of 93 cents per share, which missed the Zacks Consensus Estimate of 97 cents and came 29% below the year-ago quarter figure of $1.30.

Emerson Electric Company (EMR) - Earnings Surprise | FindTheCompany

The decline was attributable to strong spending reduction by global customers in oil & gas and industrial markets, strengthening of the U.S. dollar as well as sluggishness in emerging markets.

For fiscal 2015, adjusted earnings per share came in at $3.17, down from $3.75 in fiscal 2014.

Inside the Headlines

For fourth-quarter fiscal 2015, net sales decreased 15% year over year to $5,814 million and missed the Zacks Consensus Estimate of $5,865 million. Underlying sales in the quarter went down by 7%, with modest growth in Commercial & Residential Solutions.

Also, for fiscal 2015, net sales dipped 9% year over year to $22,304 million owing to strong macroeconomic uncertainties faced during the fiscal year.

As per the segments, Process Management segment net sales fell about 16% in the quarter , with underlying sales slipping 10%, attributable to low order rates stemming from weak global spending in the oil and gas industry.

The Industrial Automation segment reported a 28% decline in year-over-year net sales, with an underlying sales decrease of 12% due to the persistent weakness in European demand, industrial spending and upstream oil and gas markets.

Net sales in the Network Power segment contracted 10%, with a decrease of 4% in underlying sales. The segment witnessed mixed demand for data center infrastructure and telecommunications investments globally.

Net sales in the Climate Technologies segment fell 8% in the quarter, with a 5% decrease in underlying sales, hurt by increased restructuring expenses and weak demand in China.

Commercial & Residential Solutions net sales dipped 1%, with a rise of 3% in underlying sales, driven by improving U.S. construction market.

Liquidity & Cash Flow

Exiting the year, the company had cash and cash equivalents of $3.1 billion with long-term debt of $4.3 billion. Meanwhile, for the fiscal year, net cash provided by operating activities totaled $2,529 million.

Outlook

Citing an unfavorable operating environment through the majority of fiscal 2016, Emerson projects adjusted earnings per share to be in the range of $3.05 to $3.25. Also, the company anticipates net sales to decline in the range of 6% to 8% in the fiscal year.

Further, Emerson anticipates around $300 to $400 million in expenses related to the spinoff of Network Power and proposed divestitures of the Motors and Drives and Power Generation businesses.

To Conclude

Emerson came up with dismal earnings again, with persisting problems adding to the woes throughout the fiscal year. For fiscal 2016, the company anticipates the global market environment to remain challenging for its business, with strong U.S. dollar, low industrial spending and weakness in emerging and mature economies among the major concerns. Further, Emerson foresees decrease in profitability in the near term owing to volume deleverage stemming from weakness in underlying sales and impact of restructuring initiatives.

Emerson currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the same sector include Powell Industries, Inc. POWL , Dycom Industries Inc. DY and Jiangsu Expressway Co. Ltd. JEXYY . While Dycom carries a Zacks Rank #1 (Strong Buy), Powell Industries and Jiangsu Expressway holds a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

EMERSON ELEC CO (EMR): Free Stock Analysis Report

DYCOM INDS (DY): Free Stock Analysis Report

JIANSU EXPWY CO (JEXYY): Free Stock Analysis Report

POWELL INDS (POWL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

POWL DY JEXYY EMR

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More