Emerson Electric 2025 Q2 Earnings Misses Targets as Net Income Declines 14.5%

Emerson Electric (EMR) reported its fiscal 2025 Q2 earnings on May 07th, 2025. The total revenue of Emerson Electric increased by 1.3% to $4.43 billion in 2025 Q2, up from $4.38 billion in 2024 Q2. Emerson Electric's second-quarter earnings missed revenue expectations by 1.1%, reporting $4.18 billion, up 1.4% year-on-year. While adjusted EPS exceeded estimates, GAAP EPS decreased due to transaction-related costs. Analysts anticipate flat revenue year-on-year at $4.38 billion and adjusted earnings of $1.41 per share in the upcoming quarter.

Revenue

The total revenue of Emerson Electric increased by 1.3% to $4.43 billion in 2025 Q2, up from $4.38 billion in 2024 Q2.

Earnings/Net Income

Emerson Electric's EPS declined 2.3% to $0.86 in 2025 Q2 from $0.88 in 2024 Q2. Meanwhile, the company's net income declined to $430 million in 2025 Q2, down 14.5% from $503 million reported in 2024 Q2. The EPS decline indicates a slowing performance.

Price Action

The stock price of Emerson Electric has dropped 4.44% during the latest trading day, has climbed 4.52% during the most recent full trading week, and has surged 16.17% month-to-date.

Post Earnings Price Action Review

The strategy of buying Emerson Electric shares after its quarterly revenue increase and holding for 30 days yielded moderate returns over the past five years, with a compound annual return rate (CARR) of 0.4% per year. This is notably lower than the 15% average annual increase in the share price, indicating that market participants have valued the company more favorably due to its consistent earnings growth. Over the past five years, Emerson Electric's share price grew by 99%, outperforming the market return of 98%. This growth highlights the company's strong fundamentals in driving long-term shareholder returns, despite a lower EPS growth rate of 0.4% per year compared to the significant share price appreciation. Investors should consider Emerson's potential for capital appreciation and its dividend history when evaluating long-term returns.

CEO Commentary

“Emerson delivered strong underlying orders in the second quarter with margin expansion and adjusted earnings exceeding our expectations,” said Lal Karsanbhai, President and Chief Executive Officer. The company achieved record gross profit and adjusted segment EBITA margins, highlighting the value of its leading technology and operational excellence. Karsanbhai noted the successful completion of Emerson's portfolio transformation with the AspenTech acquisition and emphasized the decision to retain the Safety & Productivity segment to drive industry-leading margins and cash flow. Looking ahead, he expressed optimism about capitalizing on growth opportunities from the transformed portfolio.

Guidance

The fiscal year 2025 guidance reflects full ownership of AspenTech, with an expected net sales growth of approximately 4%, while GAAP EPS is projected to decrease due to transaction-related costs. Adjusted EPS guidance is increased at the midpoint, with operating cash flow expectations set at $3.5B - $3.6B and free cash flow at $3.1B - $3.2B. Emerson anticipates returning approximately $2.3B to shareholders through $1.1B in share repurchases and $1.2B in dividends.

Additional News

In recent strategic developments, Emerson has completed its acquisition of AspenTech, enhancing its portfolio and reinforcing its operational capabilities. The company has also announced plans to return approximately $2.3 billion to shareholders through dividends and share repurchases, indicating strong shareholder value focus. Additionally, Emerson has decided to retain its Safety & Productivity segment after a strategic review, highlighting the segment’s robust margins and cash flow, which are expected to drive future growth. These moves demonstrate Emerson's commitment to strengthening its market position and delivering long-term value to its shareholders.