Is Now The Time To Look At Buying Emerson Electric Co. (NYSE:EMR)?

By
Simply Wall St
Published
April 18, 2022
NYSE:EMR
Source: Shutterstock

Today we're going to take a look at the well-established Emerson Electric Co. (NYSE:EMR). The company's stock saw significant share price movement during recent months on the NYSE, rising to highs of US$99.06 and falling to the lows of US$89.51. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Emerson Electric's current trading price of US$92.86 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Emerson Electric’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Emerson Electric

What is Emerson Electric worth?

According to my valuation model, Emerson Electric seems to be fairly priced at around 6.2% below my intrinsic value, which means if you buy Emerson Electric today, you’d be paying a fair price for it. And if you believe the company’s true value is $98.98, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Emerson Electric’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Emerson Electric?

earnings-and-revenue-growth
NYSE:EMR Earnings and Revenue Growth April 18th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 13% over the next couple of years, the outlook is positive for Emerson Electric. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in EMR’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on EMR, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Since timing is quite important when it comes to individual stock picking, it's worth taking a look at what those latest analysts forecasts are. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Emerson Electric, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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