Is Emerson Electric (EMR) Likely to Miss on Earnings Again? - Analyst Blog

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Emerson Electric Co. ( EMR ), a global technological solutions provider, is set to report fourth-quarter and full-year 2014 results on Nov 4, before the opening bell. Last quarter, it posted a negative surprise of 2.8%. Let us see how things are shaping up for this announcement.

Factors to Consider

Emerson's business had been benefiting from accelerated growth conditions in the emerging markets like China. The company has also been focusing on enhancing its product portfolio, as evident from its recent extension to global reliability management consulting service.

However, the unfavorable currency translations and the ongoing political instability and economic uncertainty in certain regions like Europe, especially Germany, continue to pose concerns. Further, management is restructuring and repositioning the company in order to combat impacts from the global economic meltdown. Consequently, restructuring charges are negatively impacting net earnings.

Earnings Whispers?

Our proven model does not conclusively show that Emerson is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Earnings ESP represent the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Emerson's Most Accurate estimate stands at $1.21 while the Zacks Consensus Estimate is pegged at $1.22. Hence, the difference stands at -0.82% for the stock.

Zacks Rank: Emerson'sZacks Rank #3 (Hold) increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Apple Inc. ( AAPL ), with Earnings ESP of +1.22% and a Zacks Rank #1 (Strong Buy).

Amedisys Inc. ( AMED ), with Earnings ESP of + 8.33% and a Zacks Rank #1.

BlackBerry Limited ( BBRY ), with Earnings ESP of +100.00% and a Zacks Rank #2 (Buy).

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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.

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