Emerson Electric (EMR): Assessing Valuation After Dividend Hike, Buyback Plan, and Strong Earnings Guidance

Emerson Electric (EMR) just wrapped up a strong year, boosting both its sales and net income while laying out upbeat earnings guidance for 2026. The company also announced a new share repurchase plan and increased its dividend.

See our latest analysis for Emerson Electric.

Emerson’s recent run of positive announcements, including the expansion into lithium mining automation and a fresh buyback authorization, has helped support investor confidence even as shares have dipped about 1% over the past month. Despite the recent pullback, the stock’s 1-year total return of 1.7% feels modest compared to its impressive 44% total return over three years and 85% over five years. This suggests that long-term shareholders have seen steady gains while short-term momentum has cooled for now.

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With robust results and upbeat guidance on the table, the key question for investors now is whether Emerson Electric is undervalued or if the market has already priced in these growth drivers. Could there be more opportunity ahead, or has the rally run its course?

Most Popular Narrative: 14.8% Undervalued

The narrative fair value for Emerson Electric lands at $150.84, which is 14.8% above the most recent closing price of $128.46. This signals that the dominant viewpoint still sees meaningful upside from current levels, despite the market’s more cautious stance in recent weeks.

The company's transformation toward a pure-play automation leader, emphasizing innovation, commercialization of new products, and operational excellence, continues to yield improved profitability (for example, margin expansion and higher free cash flow). This positions Emerson to capitalize on long-term modernization and infrastructure trends. Broad-based recovery in Test & Measurement and outsized regional strength (especially in Asia and North America) is driving double-digit order growth in discrete automation segments. This cyclical upswing, combined with the company's improved go-to-market approach, supports further revenue acceleration and incremental earnings leverage.

Read the complete narrative.

Want to see what’s driving this bullish outlook? The heart of the narrative is a bold bet on future profits and a valuation multiple that would not look out of place for a tech giant. Curious which financial metrics back up this premium pricing? Unpack the details behind these ambitious projections to discover what’s fueling the fair value.

Result: Fair Value of $150.84 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, setbacks such as margin pressure from tariffs or slowing growth in key markets could challenge Emerson's upbeat outlook and temper future gains.

Find out about the key risks to this Emerson Electric narrative.

Another View: What Do Earnings Ratios Say?

Looking at the company's price-to-earnings ratio paints a different picture. Emerson trades at 31.6x earnings, which is just above the US Electrical industry average of 30.2x, but well below the peer average of 43.8x. Compared to its fair ratio of 31.2x, the shares look only slightly expensive. This slim gap suggests the upside could be limited here unless earnings outpace the market's expectations. Are investors being cautious for a reason, or could a re-rating unlock more value?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Emerson Electric Narrative

If you see things differently, or would rather follow your own instincts, you can dig into the numbers and build a personal investment case in just a few minutes. Do it your way

A great starting point for your Emerson Electric research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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