Next Tuesday, Emerson Electric (NYSE: EMR ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Emerson makes a variety of electrical equipment, but a once-sleepy industry has become a hotbed of competition as clean-energy initiatives have led businesses to pay more attention to measures that can help them be more energy-efficient. Let's take an early look at what's been happening with Emerson Electric over the past quarter and what we're likely to see in its quarterly report.
Stats on Emerson Electric
| Analyst EPS Estimate | $0.78 |
| Change From Year-Ago EPS | 5.1% |
| Revenue Estimate | $6.03 billion |
| Change From Year-Ago Revenue | 1.9% |
| Earnings Beats in Past 4 Quarters | 2 |
Source: Yahoo! Finance.
Can Emerson Electric's earnings keep investors happy this quarter?
Analysts have been somewhat less optimistic about Emerson Electric's near-term earnings prospects lately, having cut $0.02 per share from their estimates for the just-ended quarter. Longer term, they've seen a bit more promise for the company, boosting their full-year fiscal 2014 consensus by the same amount. The stock has languished, however, losing about 2% of its value since late January.
Emerson has had a solid, growing business for decades, stringing together a 56-year streak of annual dividend increases that has left shareholders feeling well taken care of. With segments including climate control, process management, network power, and industrial automation, Emerson offers plenty of ways for businesses to become more efficient.
The drive toward clean energy has opened up a number of opportunities for Emerson and its peers. Through membership in the Smart Manufacturing Leadership Coalition, Emerson Process Management, as well as divisions of Honeywell (NYSE: HON ) and Rockwell Automation (NYSE: ROK ) , won a Department of Energy contract in March to investigate more energy-efficient manufacturing processes. Although the contract is small, the advances the coalition will produce should bolster Emerson's business prospects. Moreover, it should help Emerson hold off industry giant General Electric (NYSE: GE ) , which has returned to its roots to make a bigger splash in the electrical industry. Specifically, GE initiatives like its smart-grid technology encroach on potential growth areas for Emerson.
Emerson has also looked to capture its share of the budding data-center infrastructure business. With Big Data becoming increasingly important to businesses throughout the economy, Emerson announced earlier this week new advances that make it easier for data-infrastructure equipment to find and diagnose problems before they bud into severely disruptive failures.
In Emerson's quarterly report, watch for how the company is faring against its competitors, several of which have made strategic moves to boost the size of their operations recently. In particular, Emerson needs to take steps to defend its turf against GE and keep moving forward in its own right.
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