Emerson Electric Co. Stock Buy Recommendation Reiterated (EMR)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Emerson Electric (NYSE: EMR) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Electrical Equipment industry average. The net income increased by 2.9% when compared to the same quarter one year prior, going from $545.00 million to $561.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
  • 42.40% is the gross profit margin for EMERSON ELECTRIC CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.41% is above that of the industry average.
  • Net operating cash flow has slightly increased to $597.00 million or 6.22% when compared to the same quarter last year. Despite an increase in cash flow, EMERSON ELECTRIC CO's average is still marginally south of the industry average growth rate of 6.90%.

Emerson Electric Co., a diversified technology company, engages in designing and supplying products and technology, and providing engineering services and solutions to the industrial, commercial, and consumer markets worldwide. Emerson Electric has a market cap of $40.9 billion and is part of the technology sector and electronics industry. The company has a P/E ratio of 20.00, above the S&P 500 P/E ratio of 18.00. Shares are up 7.5% year to date as of the close of trading on Friday.

You can view the full Emerson Electric Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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