Emerson Earnings: Strong Quarter, but Moderating Discrete Orders and AspenTech Noise Give Us Pause

While wide-moat-rated Emerson Electric’s fiscal second-quarter results were very solid and easily surpassed our expectations for the quarter, we maintain our $103 fair value estimate. Consolidated revenue of $3.76 billion beat our expectations by about 5%, while adjusted EPS of $1.09 surpassed what we penciled in by over 11%. While we’re pleased with core Emerson’s results, AspenTech underperformed both its initial guide and what our covering analyst was modeling. This gives us pause because one of our general concerns with Emerson is its spotty history of integration and overpaying for assets, despite the strong strategic rationales for its past deals.