Emerson Gears Up to Report Q2 Earnings: What's in Store?

Emerson Electric Co. EMR is likely to witness bottom and top-line growth when it reports second-quarter fiscal 2025  (ended March 31, 2025) results on May 7, before market open. The Zacks Consensus Estimate for revenues is pegged at $4.38 billion, indicating growth of 0.1% from the prior-year quarter’s figure. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The consensus mark for earnings is pinned at $1.42 per share, increasing a penny in the past 60 days. The figure indicates a jump of 4.4% from the prior-year figure. The company’s bottom line surpassed the Zacks Consensus Estimate by 7.8% in the last reported quarter. EMR beat on earnings in each of the trailing four quarters, delivering an average surprise of 4.3%.

Let’s see how things have shaped up for Emerson prior to the announcement.

Factors Likely to Have Shaped EMR’s Quarterly Performance

Strength across Emerson’s final control business, driven by solid momentum in the power end markets, is likely to have benefited the top-line performance of its Intelligent Devices segment in the fiscal second quarter. Robust growth in all geographies and strong backlog conversion levels are likely to have aided the Measurement & Analytical business.

However, softness in the discrete automation business, owing to softness across all geographies, is likely to have been a drag on the unit’s performance. We expect the Intelligent Devices segment’s revenues to decrease 0.1% from the year-ago quarter's level to $3.06 billion.

Strength in the Control Systems & Software business, driven by solid momentum in the power and process end markets, is likely to have augmented the performance of the Software and Control segment. Solid momentum in AspenTech, arising from an increase in license revenues, driven by favorable timing of renewals and growth in new contracts, is expected to have acted as a tailwind for the segment. We anticipate the segment’s revenues to increase 0.6% year over year to $1.34 billion.

EMR acquired Afag and Flexim in the fourth quarter of fiscal 2023 (ended September 2023). 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.

Also, EMR’s acquisition of National Instruments (October 2023), which has expanded its presence in high-growth end markets, including semiconductor and electronics, transportation and electric vehicles, is likely to have augmented its top line.

However, escalating costs and expenses related to its acquisition and restructuring-related actions are likely to have affected EMR’s margin performance. Also, given the company’s substantial international operations, foreign currency headwinds are likely to have marred its margins and profitability.

Earnings Whispers

Our proven model predicts an earnings beat for EMR this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here, as elaborated below. 

Earnings ESP: EMR has an Earnings ESP of +2.42% as the Most Accurate Estimate is pegged at $1.45 per share, which is higher than the Zacks Consensus Estimate of $1.42. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: EMR currently carries a Zacks Rank of 3.

Performance of Another Company

AZZ Inc. AZZ came out with quarterly earnings of $0.98 per share, beating the Zacks Consensus Estimate of $0.95. This compares with earnings of $0.93 per share a year ago.

AZZ reported revenues of $351.88 million, missing the consensus estimate by 3.77%. This compares with year-ago revenues of $366.5 million.

Other Stocks to Consider

Here are some other companies, which according to our model, have the right combination of elements to beat on earnings in this reporting cycle.

Sealed Air Corporation SEE has an Earnings ESP of +0.12% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is slated to release first-quarter 2025 results on May 6. Illinois Tool’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.1%.

Trimble Inc. TRMB has an Earnings ESP of +5.44% and a Zacks Rank of 3 at present. The company is scheduled to release first-quarter 2025 results on May 7.

TRMB’s earnings surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 7.8%.

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

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