Emerson Earnings: Discrete Market Weakness and Soft NI First-Year Sales Contributions Disappoint

Nothing materially alters our long-term thesis for wide-moat-rated Emerson. After fully folding in National Instruments’ financials, we lift our fair value estimate to $109 from $105. While long-term contributions were a benefit, National Instruments’, or NI's, implied year one contributions (expected sales down midsingle digits) disappointed our initial expectations. Furthermore, Emerson’s fiscal fourth-quarter revenue also somewhat disappointed us. NI’s weak near-term expectations, however, were fully offset by a better organic sales guide from core Emerson, our model’s additional year of revenue, and the time value of money.