Intrinsic value of Emerson Electric - EMR

Previous Close

$60.43

  Intrinsic Value

$44.92

stock screener

  Rating & Target

sell

-26%

  Value-price divergence*

-39%

Previous close

$60.43

 
Intrinsic value

$44.92

 
Up/down potential

-26%

 
Rating

sell

 
Value-price divergence*

-39%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of EMR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 38.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -10.63
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  14,522
  14,812
  15,153
  15,543
  15,980
  16,464
  16,996
  17,575
  18,201
  18,876
  19,601
  20,376
  21,203
  22,083
  23,019
  24,012
  25,064
  26,178
  27,356
  28,600
  29,915
  31,301
  32,763
  34,305
  35,929
  37,639
  39,440
  41,336
  43,330
  45,429
  47,636
Variable operating expenses, $m
 
  10,346
  10,575
  10,837
  11,131
  11,456
  11,813
  12,202
  12,624
  13,077
  13,564
  13,694
  14,250
  14,842
  15,471
  16,138
  16,845
  17,594
  18,385
  19,222
  20,105
  21,037
  22,020
  23,056
  24,147
  25,297
  26,507
  27,781
  29,122
  30,532
  32,015
Fixed operating expenses, $m
 
  2,072
  2,123
  2,176
  2,231
  2,287
  2,344
  2,402
  2,462
  2,524
  2,587
  2,652
  2,718
  2,786
  2,856
  2,927
  3,000
  3,075
  3,152
  3,231
  3,312
  3,394
  3,479
  3,566
  3,655
  3,747
  3,840
  3,937
  4,035
  4,136
  4,239
Total operating expenses, $m
  12,121
  12,418
  12,698
  13,013
  13,362
  13,743
  14,157
  14,604
  15,086
  15,601
  16,151
  16,346
  16,968
  17,628
  18,327
  19,065
  19,845
  20,669
  21,537
  22,453
  23,417
  24,431
  25,499
  26,622
  27,802
  29,044
  30,347
  31,718
  33,157
  34,668
  36,254
Operating income, $m
  2,401
  2,395
  2,455
  2,529
  2,618
  2,721
  2,839
  2,970
  3,115
  3,275
  3,449
  4,030
  4,235
  4,455
  4,693
  4,947
  5,219
  5,509
  5,818
  6,148
  6,498
  6,870
  7,264
  7,683
  8,126
  8,596
  9,093
  9,618
  10,174
  10,761
  11,382
EBITDA, $m
  2,969
  3,051
  3,117
  3,199
  3,295
  3,407
  3,534
  3,675
  3,832
  4,004
  4,191
  4,395
  4,614
  4,851
  5,105
  5,377
  5,668
  5,978
  6,308
  6,660
  7,034
  7,430
  7,851
  8,297
  8,770
  9,270
  9,799
  10,358
  10,950
  11,575
  12,235
Interest expense (income), $m
  209
  142
  150
  159
  170
  182
  196
  211
  227
  244
  263
  283
  305
  328
  352
  379
  406
  436
  467
  500
  534
  571
  610
  650
  693
  739
  786
  837
  889
  945
  1,004
Earnings before tax, $m
  2,316
  2,253
  2,305
  2,370
  2,448
  2,539
  2,643
  2,759
  2,889
  3,031
  3,186
  3,747
  3,930
  4,128
  4,340
  4,568
  4,813
  5,073
  5,352
  5,648
  5,964
  6,299
  6,655
  7,033
  7,433
  7,857
  8,306
  8,782
  9,284
  9,816
  10,378
Tax expense, $m
  697
  608
  622
  640
  661
  686
  714
  745
  780
  818
  860
  1,012
  1,061
  1,114
  1,172
  1,233
  1,299
  1,370
  1,445
  1,525
  1,610
  1,701
  1,797
  1,899
  2,007
  2,121
  2,243
  2,371
  2,507
  2,650
  2,802
Net income, $m
  1,635
  1,645
  1,683
  1,730
  1,787
  1,854
  1,929
  2,014
  2,109
  2,212
  2,326
  2,735
  2,869
  3,013
  3,168
  3,335
  3,513
  3,704
  3,907
  4,123
  4,353
  4,598
  4,858
  5,134
  5,426
  5,736
  6,064
  6,411
  6,778
  7,166
  7,576

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,182
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  21,732
  18,918
  19,353
  19,850
  20,408
  21,027
  21,706
  22,445
  23,245
  24,107
  25,033
  26,022
  27,079
  28,203
  29,398
  30,666
  32,010
  33,433
  34,937
  36,527
  38,205
  39,976
  41,843
  43,812
  45,886
  48,071
  50,371
  52,792
  55,339
  58,019
  60,838
Adjusted assets (=assets-cash), $m
  18,550
  18,918
  19,353
  19,850
  20,408
  21,027
  21,706
  22,445
  23,245
  24,107
  25,033
  26,022
  27,079
  28,203
  29,398
  30,666
  32,010
  33,433
  34,937
  36,527
  38,205
  39,976
  41,843
  43,812
  45,886
  48,071
  50,371
  52,792
  55,339
  58,019
  60,838
Revenue / Adjusted assets
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
  0.783
Average production assets, $m
  4,472
  4,562
  4,667
  4,787
  4,922
  5,071
  5,235
  5,413
  5,606
  5,814
  6,037
  6,276
  6,530
  6,802
  7,090
  7,396
  7,720
  8,063
  8,426
  8,809
  9,214
  9,641
  10,091
  10,566
  11,066
  11,593
  12,148
  12,731
  13,346
  13,992
  14,672
Working capital, $m
  1,952
  1,378
  1,409
  1,445
  1,486
  1,531
  1,581
  1,634
  1,693
  1,755
  1,823
  1,895
  1,972
  2,054
  2,141
  2,233
  2,331
  2,435
  2,544
  2,660
  2,782
  2,911
  3,047
  3,190
  3,341
  3,500
  3,668
  3,844
  4,030
  4,225
  4,430
Total debt, $m
  6,635
  4,276
  4,547
  4,857
  5,206
  5,592
  6,016
  6,477
  6,976
  7,514
  8,091
  8,709
  9,368
  10,070
  10,815
  11,607
  12,445
  13,333
  14,272
  15,264
  16,311
  17,416
  18,581
  19,810
  21,104
  22,467
  23,902
  25,413
  27,003
  28,675
  30,434
Total liabilities, $m
  14,164
  11,805
  12,076
  12,386
  12,735
  13,121
  13,545
  14,006
  14,505
  15,043
  15,620
  16,238
  16,897
  17,599
  18,344
  19,136
  19,974
  20,862
  21,801
  22,793
  23,840
  24,945
  26,110
  27,339
  28,633
  29,996
  31,431
  32,942
  34,532
  36,204
  37,963
Total equity, $m
  7,568
  7,113
  7,277
  7,464
  7,674
  7,906
  8,161
  8,439
  8,740
  9,064
  9,412
  9,784
  10,182
  10,604
  11,054
  11,531
  12,036
  12,571
  13,136
  13,734
  14,365
  15,031
  15,733
  16,473
  17,253
  18,075
  18,939
  19,850
  20,807
  21,815
  22,875
Total liabilities and equity, $m
  21,732
  18,918
  19,353
  19,850
  20,409
  21,027
  21,706
  22,445
  23,245
  24,107
  25,032
  26,022
  27,079
  28,203
  29,398
  30,667
  32,010
  33,433
  34,937
  36,527
  38,205
  39,976
  41,843
  43,812
  45,886
  48,071
  50,370
  52,792
  55,339
  58,019
  60,838
Debt-to-equity ratio
  0.877
  0.600
  0.620
  0.650
  0.680
  0.710
  0.740
  0.770
  0.800
  0.830
  0.860
  0.890
  0.920
  0.950
  0.980
  1.010
  1.030
  1.060
  1.090
  1.110
  1.140
  1.160
  1.180
  1.200
  1.220
  1.240
  1.260
  1.280
  1.300
  1.310
  1.330
Adjusted equity ratio
  0.236
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,635
  1,645
  1,683
  1,730
  1,787
  1,854
  1,929
  2,014
  2,109
  2,212
  2,326
  2,735
  2,869
  3,013
  3,168
  3,335
  3,513
  3,704
  3,907
  4,123
  4,353
  4,598
  4,858
  5,134
  5,426
  5,736
  6,064
  6,411
  6,778
  7,166
  7,576
Depreciation, amort., depletion, $m
  568
  656
  662
  669
  677
  686
  695
  706
  717
  729
  742
  365
  380
  395
  412
  430
  449
  469
  490
  512
  536
  561
  587
  614
  643
  674
  706
  740
  776
  813
  853
Funds from operations, $m
  3,259
  2,301
  2,345
  2,399
  2,464
  2,539
  2,625
  2,720
  2,825
  2,941
  3,068
  3,100
  3,248
  3,409
  3,581
  3,765
  3,962
  4,172
  4,397
  4,635
  4,889
  5,159
  5,445
  5,748
  6,069
  6,410
  6,770
  7,151
  7,554
  7,979
  8,429
Change in working capital, $m
  378
  27
  32
  36
  41
  45
  49
  54
  58
  63
  67
  72
  77
  82
  87
  92
  98
  104
  110
  116
  122
  129
  136
  143
  151
  159
  167
  176
  186
  195
  205
Cash from operations, $m
  2,881
  2,274
  2,313
  2,363
  2,424
  2,494
  2,575
  2,666
  2,767
  2,879
  3,001
  3,028
  3,172
  3,327
  3,494
  3,673
  3,864
  4,069
  4,287
  4,520
  4,767
  5,030
  5,309
  5,605
  5,918
  6,251
  6,602
  6,975
  7,368
  7,784
  8,224
Maintenance CAPEX, $m
  0
  -260
  -265
  -271
  -278
  -286
  -295
  -304
  -315
  -326
  -338
  -351
  -365
  -380
  -395
  -412
  -430
  -449
  -469
  -490
  -512
  -536
  -561
  -587
  -614
  -643
  -674
  -706
  -740
  -776
  -813
New CAPEX, $m
  -447
  -90
  -105
  -120
  -135
  -149
  -164
  -178
  -193
  -208
  -223
  -239
  -255
  -271
  -288
  -306
  -324
  -343
  -363
  -383
  -405
  -427
  -450
  -475
  -500
  -527
  -555
  -584
  -614
  -646
  -680
Cash from investing activities, $m
  -626
  -350
  -370
  -391
  -413
  -435
  -459
  -482
  -508
  -534
  -561
  -590
  -620
  -651
  -683
  -718
  -754
  -792
  -832
  -873
  -917
  -963
  -1,011
  -1,062
  -1,114
  -1,170
  -1,229
  -1,290
  -1,354
  -1,422
  -1,493
Free cash flow, $m
  2,255
  1,924
  1,943
  1,972
  2,011
  2,059
  2,117
  2,183
  2,259
  2,345
  2,439
  2,438
  2,552
  2,676
  2,810
  2,954
  3,110
  3,277
  3,456
  3,646
  3,850
  4,067
  4,298
  4,543
  4,804
  5,080
  5,374
  5,684
  6,014
  6,362
  6,730
Issuance/(repayment) of debt, $m
  -198
  225
  272
  310
  348
  386
  424
  461
  499
  538
  577
  618
  659
  702
  746
  791
  839
  888
  939
  992
  1,047
  1,105
  1,165
  1,228
  1,294
  1,363
  1,435
  1,511
  1,590
  1,672
  1,759
Issuance/(repurchase) of shares, $m
  -601
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -818
  225
  272
  310
  348
  386
  424
  461
  499
  538
  577
  618
  659
  702
  746
  791
  839
  888
  939
  992
  1,047
  1,105
  1,165
  1,228
  1,294
  1,363
  1,435
  1,511
  1,590
  1,672
  1,759
Total cash flow (excl. dividends), $m
  1,355
  2,148
  2,215
  2,282
  2,359
  2,445
  2,540
  2,645
  2,759
  2,883
  3,017
  3,056
  3,211
  3,378
  3,556
  3,746
  3,949
  4,165
  4,394
  4,638
  4,897
  5,172
  5,463
  5,772
  6,098
  6,444
  6,809
  7,195
  7,603
  8,034
  8,489
Retained Cash Flow (-), $m
  513
  -143
  -164
  -187
  -210
  -233
  -255
  -278
  -301
  -324
  -348
  -372
  -397
  -423
  -449
  -477
  -505
  -535
  -566
  -598
  -631
  -666
  -702
  -740
  -780
  -821
  -865
  -910
  -958
  -1,008
  -1,060
Prev. year cash balance distribution, $m
 
  598
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,603
  2,051
  2,095
  2,149
  2,212
  2,285
  2,367
  2,458
  2,559
  2,669
  2,684
  2,814
  2,955
  3,106
  3,269
  3,443
  3,630
  3,829
  4,041
  4,266
  4,506
  4,761
  5,031
  5,318
  5,622
  5,944
  6,285
  6,645
  7,026
  7,429
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  2,496
  1,878
  1,823
  1,770
  1,715
  1,658
  1,599
  1,536
  1,470
  1,399
  1,274
  1,201
  1,123
  1,043
  960
  875
  790
  705
  622
  542
  466
  395
  330
  271
  219
  173
  135
  103
  77
  56
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Emerson Electric Co. designs and manufactures products, and delivers services to industrial, commercial, and consumer markets worldwide. The company’s Process Management segment offers systems and software; measurement and analytical instrumentation; valves, actuators, and regulators; industry services and solutions; and digital plant architecture solutions. It also provides consulting services for precision measurement, control, monitoring, asset optimization, and safety and reliability of oil and gas reservoirs and plants. This segment serves oil and gas, refining, chemicals, power generation, pharmaceuticals, food and beverages, pulp and paper, metal and mining, and municipal water supplies markets. Its Industrial Automation segment provides fluid power and control products; electrical distribution equipment; and materials joining and precision cleaning products, as well as hermetic motors. The company’s Climate Technologies segment supplies compressors, temperature sensors and controls, thermostats, flow controls, and remote monitoring technology and services to residential heating and cooling, commercial air conditioning, commercial and industrial refrigeration, and marine control areas. Its Commercial & Residential Solutions segment provides tools for professionals and homeowners; home storage systems; and appliance solutions. The company was formerly known as The Emerson Electric Manufacturing Company and changed its name to Emerson Electric Co. in 2000. Emerson Electric Co. was founded in 1890 and is headquartered in St. Louis, Missouri.

FINANCIAL RATIOS  of  Emerson Electric (EMR)

Valuation Ratios
P/E Ratio 23.8
Price to Sales 2.7
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 13.5
Price to Free Cash Flow 16
Growth Rates
Sales Growth Rate -10.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24%
Cap. Spend. - 3 Yr. Gr. Rate -8%
Financial Strength
Quick Ratio 1
Current Ratio 0.4
LT Debt to Equity 53.5%
Total Debt to Equity 87.7%
Interest Coverage 12
Management Effectiveness
Return On Assets 8.1%
Ret/ On Assets - 3 Yr. Avg. 9.9%
Return On Total Capital 11.2%
Ret/ On T. Cap. - 3 Yr. Avg. 14%
Return On Equity 20.9%
Return On Equity - 3 Yr. Avg. 23.8%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 42.6%
Gross Margin - 3 Yr. Avg. 43.1%
EBITDA Margin 21.3%
EBITDA Margin - 3 Yr. Avg. 23.9%
Operating Margin 16.5%
Oper. Margin - 3 Yr. Avg. 17.9%
Pre-Tax Margin 15.9%
Pre-Tax Margin - 3 Yr. Avg. 19.1%
Net Profit Margin 11.3%
Net Profit Margin - 3 Yr. Avg. 13.3%
Effective Tax Rate 30.1%
Eff/ Tax Rate - 3 Yr. Avg. 31.1%
Payout Ratio 75%

EMR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EMR stock intrinsic value calculation we used $14522 million for the last fiscal year's total revenue generated by Emerson Electric. The default revenue input number comes from 2016 income statement of Emerson Electric. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our EMR stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for EMR is calculated based on our internal credit rating of Emerson Electric, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Emerson Electric.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of EMR stock the variable cost ratio is equal to 69.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2021 million in the base year in the intrinsic value calculation for EMR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Emerson Electric.

Corporate tax rate of 27% is the nominal tax rate for Emerson Electric. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the EMR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for EMR are equal to 30.8%.

Life of production assets of 17.2 years is the average useful life of capital assets used in Emerson Electric operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for EMR is equal to 9.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $7568 million for Emerson Electric - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 641.59 million for Emerson Electric is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Emerson Electric at the current share price and the inputted number of shares is $38.8 billion.

RELATED COMPANIES Price Int.Val. Rating
HON Honeywell Inte 137.25 126.43  hold
DOV Dover 84.28 176.49  str.buy
ABB ABB ADR 23.47 21.64  hold
GE General Electr 25.44 16.08  sell
AME Ametek 61.78 77.18  buy
ROK Rockwell Autom 163.10 196.40  hold
DHR Danaher 81.99 68.69  hold
ITW Illinois Tool 141.65 100.85  sell
PH Parker Hannifi 165.98 252.26  str.buy

COMPANY NEWS

▶ Blue-Chip Stocks in Focus: Emerson Electric   [Jul-25-17 07:29PM  GuruFocus.com]
▶ 5 Lousy Dividend Aristocrats To Sell Now   [Jul-23-17 09:05AM  Forbes]
▶ 2 Stocks You Can Keep Forever   [Jul-21-17 07:17AM  Motley Fool]
▶ Emerson wins $20 million automation contract   [Jul-18-17 07:45AM  American City Business Journals]
▶ Emerson investing in $100M Sidney expansion   [Jul-13-17 02:46PM  American City Business Journals]
▶ The Top Dividend-Growing Healthcare and Industrials Stocks   [Jul-12-17 02:44PM  Market Realist]
▶ Emerson Schedules Webcast for Third Quarter 2017 Results   [Jul-11-17 11:00AM  Business Wire]
▶ 3 Terrible Reasons to Sell Emerson Electric Co.   [Jun-30-17 12:39PM  Motley Fool]
▶ Emerson's Risky M&A Business   [Jun-26-17 08:30AM  Bloomberg]
▶ Emerson Electric Co: Time to Move On?   [11:19AM  Motley Fool]
▶ One industrial stock heats up for a rally   [Jun-13-17 06:15PM  CNBC Videos]
▶ 3 Top Dividend Stocks in Electrical Equipment Industry   [Jun-09-17 10:17AM  Motley Fool]
▶ 5 High-Quality Stocks to Watch Amid Volatility   [May-23-17 06:00AM  Morningstar]
▶ Manufacturer proposes more than $73 million expansion   [May-17-17 11:00AM  American City Business Journals]
▶ ETFs with exposure to Emerson Electric Co. : May 9, 2017   [May-09-17 04:33PM  Capital Cube]
▶ Emerson Electric Starts Over-Delivering for Investors   [May-03-17 07:35PM  Motley Fool]
▶ Emerson Names Gloria Flach to Board of Directors   [May-02-17 01:43PM  Business Wire]
▶ Emerson Declares Dividend   [10:01AM  Business Wire]
▶ Emerson Electric meets 2Q profit forecasts   [07:13AM  Associated Press]
▶ Emerson Reports Second Quarter 2017 Results   [06:55AM  Business Wire]
▶ Pentair Completes Sale of Valves & Controls Business   [Apr-28-17 04:02PM  GlobeNewswire]
▶ St. Louis to be U.S. hub for Indian incubator T-Hub   [09:11AM  American City Business Journals]
▶ 5 Key Takeaways From Emerson Electric Co. Presentations   [Apr-12-17 01:25PM  Motley Fool]
▶ Emerson Schedules Webcast for Second-Quarter 2017 Results   [Apr-11-17 11:00AM  Business Wire]
▶ Cramer: The Best Performers Show No Signs of Letting Up   [Apr-10-17 07:01PM  TheStreet.com]
▶ General Electric Is No Match for Emerson Electric   [Mar-20-17 04:13PM  GuruFocus.com]
▶ Why General Electric is Flying?   [Mar-10-17 02:37PM  Barrons.com]
▶ Why General Electric is Flying?   [02:37PM  at Barrons.com]
Stock chart of EMR Financial statements of EMR Annual reports of EMR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.