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Investing.com - Wolfe Research raised its price target on Emerson (NYSE:EMR) to $168.00 from $165.00 on Friday, while maintaining an Outperform rating on the industrial company’s shares. Currently trading at $123.72, Emerson sits well below the new target and analyst high target of $183, though InvestingPro data suggests the stock is fairly valued at current levels.
The price target adjustment follows Emerson’s investor event held Thursday at the New York Stock Exchange, its first such event since 2022. During the presentation, the company reaffirmed its 4-7% core growth target and increased its incremental margin target from 35% to 40%. The company has achieved 3.0% revenue growth over the last twelve months, with an impressive gross profit margin of 52.84%.
Emerson outlined a capital allocation strategy that includes returning $10 billion to shareholders between 2025 and 2028, with $6 billion allocated to share repurchases. The company set aside only $1 billion for potential acquisitions, indicating a preference for improving return on invested capital (ROIC) toward 20% rather than pursuing large M&A transactions.
The industrial firm projects earnings of $8 per share in fiscal year 2028, which exceeds the current Wall Street consensus of $7.68. This forecast incorporates $0.35 per share from the $6 billion buyback program and $0.15 per share from a 20% effective tax rate. For context, analysts expect EPS of $6.45 for FY2026, with the stock currently trading at a P/E ratio of 30.91.
Emerson has compounded growth at the high end of its 4-7% target range from 2021 to 2025, outperforming most U.S. industrial peers except those in electrical, commercial HVAC, and aerospace and defense sectors. The company forecasts approximately 2% growth for the first half of fiscal 2026, partly due to software renewal headwinds. InvestingPro identifies Emerson as a prominent player in the Electrical Equipment industry, with 10+ additional ProTips and a comprehensive Pro Research Report available for subscribers seeking deeper analysis.
In other recent news, Emerson Electric reported its fourth-quarter 2025 earnings, with earnings per share reaching $1.62, aligning with analysts’ forecasts. However, the company’s revenue was slightly below expectations, at $4.86 billion compared to the anticipated $4.9 billion. Emerson announced plans to return $10 billion to shareholders by 2028 through share repurchases and increased dividends, as shared during their 2025 Investor Conference. The company has set ambitious financial targets for 2028, including projected net sales of $21 billion and a 30% adjusted segment EBITA margin. Additionally, Emerson Electric has updated its segment reporting structure following a company transformation, effective in fiscal 2026. The new structure will include five segments: Control Systems & Software, Test & Measurement, Sensors, Final Control, and Safety & Productivity. In executive compensation news, Emerson’s board approved performance-based stock option awards for top executives, with a total of 350,000 stock options granted to both the CEO and COO. These developments reflect Emerson’s strategic adjustments and financial goals for the coming years.
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