Upcoming AWS Coverage on A. O. Smith Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 24, 2017 / Active Wall St. announces its post-earnings coverage on Emerson Electric Co. (NYSE: EMR). The Company announced its first quarter fiscal 2017 financial results on February 07, 2017. The maker of process controls systems, valves and analytical instruments surpassed top- and bottom-line expectations. Register with us now for your free membership at:

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One of Emerson Electric's competitors within the Industrial Electrical Equipment space, A. O. Smith Corp. (NYSE: AOS), reported its Q4 2016 financial results on February 02, 2017. AWS will be initiating a research report on A. O. Smith in the coming days.

Today, AWS is promoting its earnings coverage on EMR; touching on AOS. Get our free coverage by signing up to:

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Earnings Reviewed

Emerson announced net sales in the first quarter ended December 31, 2016 were down 4% to $3.22 billion compared to net sales of $3.34 billion in Q1 FY16, with underlying sales down 3%, excluding unfavorable currency translation. The Company's net sales number exceeded analysts' consensus of $3.16 billion. Emerson stated that the reported quarter results reflected mixed but generally improving global economic conditions. Growth in the Commercial & Residential Solutions platform resulted from favorable HVAC, refrigeration and US and Asian construction markets, while the Automation Solutions platform remained down due to the low price of oil but witnessed improving order rates, particularly in North America.

For Q1 FY17, Emerson reported pre-tax margin of 14.4% which exceeded the prior year by 140 basis points. The Company's EBIT margin of 15.8% also increased 140 basis points primarily due to savings from restructuring activities.

For Q1 FY17, Emerson reported earnings per share from continuing operations of $0.56 reflecting an increase of 22% on a y-o-y basis, including an income tax benefit of $0.07 per share. Emerson's operating cash flow from continuing operations was $410 million in Q1FY17, up 6% on a y-o-y basis. Including the impact of discontinued operations, the Company's earnings per share were $0.48, down 9%, and operating cash flow was $238 million, down 51% for the reported quarter. Emerson's earnings numbers surpassed Wall Street's expectations of $0.43 per share.

Business Platform Results

For Q1 FY17, Emerson's Automation Solutions' net sales declined 9% to $1.97 billion. Underlying sales were down 8% excluding unfavorable currency. The segment's underlying sales in North America were down 11%, with the US down 9%. Asia was down 2% with China up 4% reflecting stabilizing market conditions. In other regions, Europe was down 5%, Middle East/Africa was up 3%, and Latin America was down 29%. EBIT Margin increased 80 basis points to 16.6%, primarily due to savings from the prior year's restructuring actions.

Commercial & Residential Solutions net sales increased 6% to $1.25 billion, reflecting strong demand in global HVAC and refrigeration markets and favorable conditions in professional tools. The segment's underlying sales in North America increased 4%, led by strong growth in US residential and commercial air conditioning as well as a recovery in professional tools within the oil and gas sector. Asia increased 26% as broad strength in air conditioning and refrigeration markets. Growth in Asia was led by China, up 40%, where the Company has noted significant demand acceleration in the last two quarters. Europe was up 7% with solid growth in air conditioning and professional construction tools. Margin increased 140 basis points to 19.9%, primarily due to leverage on higher volume and savings from restructuring actions across the new platform structure.

Dividend Announcement

On February 07, 2017, in a separate press release, Emerson's board of directors declared the regular quarterly cash dividend of $0.48 per share of common stock payable March 10, 2017, to stockholders of record February 17, 2017.

2017 Outlook

Emerson stated that considering the Q1 2017 results and recent order trends, it is raising its outlook for FY017. The Company expects full-year net sales to decline 1% to 3%, with underlying sales flat to down 2% excluding unfavorable currency translation of approximately 1%. Earnings per share from continuing operations are now expected to be in the band of $2.47 to $2.62 compared to earlier guidance of $2.35?$2.50 per share. Automation Solutions' net sales are now expected to be down 5% to 7%, with underlying sales down 3% to 5% excluding unfavorable currency of approximately 2%. Commercial & Residential Solutions net and underlying sales are now expected to be up 3% to 5%.

Stock Performance

On Thursday, February 23, 2017, the stock closed the trading session at $60.61, declining 1.96% from its previous closing price of $61.82. A total volume of 4.82 million shares have exchanged hands, which was higher than the 3-month average volume of 3.73 million shares. Emerson Electric's stock price rallied 12.03% in the last three months, 14.22% in the past six months, and 29.77% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 9.54%. The stock is trading at a PE ratio of 23.69 and has a dividend yield of 3.17%.

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SOURCE: Active Wall Street