Emerson Gains From Business Strength Amid Persisting Headwinds

Emerson Electric Co. EMR is benefiting from the strong performance of the Intelligent Devices and Software and Control segments. Within the Intelligent Devices segment, it is seeing strength in the Final Control business, driven by solid momentum in power end markets. Sales from this business increased 4% year over year in fiscal 2025. Robust growth across the Americas and Asia, the Middle East & Africa regions is aiding the Measurement & Analytical business. The Discrete Automation business is gaining from solid momentum in the Americas region.

Within the Software and Control segment, robust growth across AspenTech and strength in the power and process end markets are supporting the Control Systems & Software business. Given the strength across its end markets, Emerson expects net sales to increase approximately 5.5% year over year in fiscal 2026 (ending September 2025).

EMR solidified its product portfolio and leveraged business opportunities through asset additions. In March 2025, the company acquired all outstanding shares of Aspen Technology’s common stock that it did not own. It is worth noting that Emerson acquired a 55% majority stake in AspenTech in 2022, later increasing its ownership to around 57%. With the close of this buyout, AspenTech now operates as a fully owned subsidiary of Emerson. The inclusion of AspenTech will boost the company’s automation portfolio and expand its reach into new markets. It will enable Emerson to advance its capabilities in software-defined control under industrial automation.

In the fourth quarter of fiscal 2023, the company completed the acquisitions of Afag and Flexim. The buyout of Afag boosted Emerson’s capabilities in factory automation, helping it expand into lucrative end markets including battery manufacturing, automotive, packaging, medical, life sciences and electronics. The acquisition of Flexim added to its existing flow measurement positions in coriolis, differential pressure, magmeter and vortex flow measurement, and expanded its automation portfolio and measurement capabilities.

Emerson is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In fiscal 2025 (ended September 2025), it paid out dividends of $1.19 billion and repurchased common stocks worth $1.17 billion. In November 2025, the company hiked its dividend by 0.5%. Emerson plans to repurchase shares worth $1 billion and pay out dividends of $1.2 billion in fiscal 2026.

EMR’s Price Performance

In the past year, this Zacks Rank #3 (Hold) company’s shares has gained 3.4% against the industry’s 2.3% decline.

However, softness across the Safety & Productivity and Test & Measurement businesses is a concern for Emerson. The Safety & Productivity business is witnessing weakness owing to tepid demand for its products across all geographies. Sales from the business declined 2% in fiscal 2025. Weakness in the Europe and China regions is adversely affecting the Test & Measurement business’ performance. Softness in the automotive and factory automation businesses is also concerning for Emerson.

Emerson has considerable exposure to regions outside the United States. Its significant international presence exposes it to political and economic disruptions, all of which can directly affect its profits. Also, the company is exposed to headwinds arising from unfavorable movements in foreign currencies.

Stocks to Consider

Some better-ranked companies are discussed below:

Flowserve Corporation FLS currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FLS delivered a trailing four-quarter average earnings surprise of 10.5%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2025 earnings has increased 3%.

Helios Technologies, Inc. HLIO presently sports a Zacks Rank of 1. HLIO delivered a trailing four-quarter average earnings surprise of 16.8%.

In the past 60 days, the consensus estimate for Helios’ 2025 earnings has increased 2.5%.

Watts Water Technologies, Inc. WTS presently carries a Zacks Rank of 2. WTS delivered a trailing four-quarter average earnings surprise of 10.9%.

In the past 60 days, the consensus estimate for Watts Water’s 2025 earnings has increased 4.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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