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Emerson Electric

Emerson has evolved through internal growth and strategic acquisitions from a regional manufacturer of electric motors and fans into a diversified global leader. This company has brought technology and engineering together to provide innovative solutions for customers in a wide range of industrial, commercial, and consumer markets worldwide. To reflect the portfolio repositioning, EMR now reports results under two segments: Automation Solutions (62% of FY17 revenues) and Commercial & Residential Solutions (38%). Sales by destination are also U.S. and Canada focused (52%), followed by Asia (21%), Europe (16%), the Middle East/Africa region (6%) and Latin America (5%). (06 Feb 2018)

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Emerson Electric: 4Q18 | Crosswinds are Building

Earnings Note: 06 Nov 2018, 10:06 PM ET - Emerson is executing well, but offered its early take on the year ahead indicating that global growth is strong but slowing. The wildcards are China and Europe.

3M: 3Q18 | Event Risk Brewing?

Worth Watching: 23 Oct 2018, 9:51 PM ET - 3M (A1/AA-) had a downright ugly quarter especially when compared to other Industrial behemoths that were on the screen today including United Technologies and Caterpillar. Reported revenue sank 0.2% $8.15 bn, due primarily to currency, and cam ..
Focused

Emerson: 3Q18 | Improving Outlook

Worth Watching: 08 Aug 2018, 9:46 AM ET - Emerson (A2/A) reported strong third quarter results, characterized by healthy top and bottom line expansion. The firm's net sales improve 10.3% YoY (up 8.0% organically), to $4.46 bn, driven by sustained global demand strength during the quart ..

Industrials 2Q18 Review: Tariffs Tame for Now

Sector Analysis: 07 Aug 2018, 4:43 AM ET - It was a strong 2Q18 earnings season for our Industrial credits. We share the salient takeaways and touch on hot button topics such as end-market trends, tariffs and event risk.

US Industrials: Macro Data Points

Sector Analysis: 12 Jun 2018, 1:59 AM ET - In this report, we tied the positive tone from Industrial management teams to select economic data points.
Focused

Emerson Electric: EPG Conference Highlights

Worth Watching: 07 Jun 2018, 2:43 PM ET - Emerson Electric (A2/A): In addition to discussing key macro takeaways from the EPG conference at the end of May and featuring more than fifteen other Industrial credits in our sector report, we note that animated Emerson CEO David Farr took th ..
Focused

US Industrials: EPG Conference | Macro to Micro

Sector Analysis: 29 May 2018, 4:47 AM ET - We attended the 3-day Electrical Products Group conference in FL last week, which featured a host of Industrial firms. The macro and end-market tone was distinctly positive.  In this report we highlight key takeaways on over 15 credits.

Textron: Sells Tools to EMR ($810 m) | Shift to MP

Worth Watching: 18 Apr 2018, 1:51 PM ET - Textron (Baa2/BBB) reported dramatically better than expected first quarter results and announced plans to sell its Tools & Test business to Emerson Electric (A2/A) with the news lifting the firm's stock around 8% intra-day. Textron reported 1Q ..

United Technologies Scenarios: United to Divided?

Company Spotlight: 16 Apr 2018, 4:15 AM ET - We see a modest multiple expansion opportunity if management does go down the break-up route and while there is also a case whereby the SpinCos could have IG ratings, we would not rule out seeing the Climate division move into HY territory.
Focused

US Cap Goods: Event Risk = Sector Underperformance

IG Note: 21 Mar 2018, 5:23 AM ET - The Capital Goods Index has been the worst performing sector on an excess return basis year-to-date. Sector returns severely lagged the Index in January with GE and UTX being notable underperformers to date.

JCI: Power Solutions in Play

IG Note: 12 Mar 2018, 9:44 PM ET - We had been flagging JCI as a credit with high event risk. Now JCI is joining other Industrials under pressure by putting Power Solutions under strategic review. We maintain our Underperform until we obtain more capital structure clarity.

Honeywell: Capital Allocation Update

IG Note: 06 Mar 2018, 8:18 PM ET - The message from HON's Investor Day last week was that capital will be allocated in a prudent manner. However, we remain guarded on the credit at current levels with a “new” CEO legacy building and there being an activist in the scene.

US Strategy: Tariffs as Repricing Event?

Strategy Analysis: 01 Mar 2018, 9:40 PM ET - The market has been building in very low odds of a trade war event, a NAFTA withdrawal, or a significant escalation of tit-for-tat trade retaliations on a broader scale.  The odds-makers just got a fresh load of input.

Section 232: The NAFTA Conundrum

Sector Analysis: 26 Feb 2018, 3:42 AM ET - Using Section 232 on Steel/Aluminum could damage supplier chains and cost structures and drive broader inflation.  A tariff gambit in such key industries could undermine the NAFTA negotiations and have immediate effects on risk pricing. 

United Technologies: Break-Up Concerns Validated

IG Note: 21 Feb 2018, 7:03 PM ET - For several years we have highlighted that there was break-up risk at United Technologies and at the Barclay’s Industrial conference, management legitimized that concern.

US IG Strategy: Picks and Pans (January 2018)

Strategy Analysis: 23 Jan 2018, 9:57 PM ET - In this short document we summarize our sector recommendations, and provide a few names within each that we like (picks) and dislike (pans). Our Picks and Pans reflect our analysts' current views. 

US Industrial 2018 Outlook: Conglomerate Conundrum

Sector Analysis: 21 Jan 2018, 9:58 PM ET - Against the backdrop of a generally favorable global demand environment, event risk is the key 2018 credit concern for the conglomerate peer group. We focus on this topic and revisit our credit recommendations for more than two dozen firms.

Dover: Risks Ratings with Spin-off Route

Worth Watching: 07 Dec 2017, 9:28 PM ET - Dover (A3/A-) placed its upstream Oil & Gas business, Wellsite under strategic review back in September and today we learned that the firm is going the spin-off route. This trend has been picking up steam across the US Industrials with recent e ..
Focused

Emerson Electric & Rockwell: Third Time’s a Charm?

Worth Watching: 16 Nov 2017, 2:13 PM ET - Emerson Electric & Rockwell: Emerson (A2/A) has not given up on its ambitions to acquire Rockwell Automation (A3/A) and today made another offer for the firm. The announcement comes as little surprise. Last week during an earnings conference cal ..

GE: Early Innings of a Long Game

IG Note: 13 Nov 2017, 10:50 PM ET - Encouraging for bondholders was seeing the dividend cut and hearing A1/P1 ratings being a target, but at this juncture we do not take such ambitions at face value and maintain our Underperform on the credit.

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