Signal to Scale
In this edition of the Smart Investor newsletter, we examine the company driving the automation backbone of global industry, energy systems, and next-gen manufacturing. We are not selling stocks today due to the surge in geopolitical risks and the low visibility into their implications. But first, let’s dive into the latest portfolio news and updates.
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Portfolio Updates
❖ Oracle (ORCL) surged over 21% last week, driven by robust fiscal Q4 2025 earnings – with top- and bottom-line beats – and a bullish outlook for fiscal 2026. Although shares have pulled back this week on profit-taking, analysts remain upbeat, citing Oracle’s AI investments as a real catalyst for long-term growth.
In FQ4, the company reported an 11% year-over-year revenue increase to $15.9 billion, surpassing expectations, and delivered EPS of $1.70 versus $1.64 expected. Remaining performance obligations (RPOs) stood at $138 billion, up 41%, with cloud RPO growing 56%. Autonomous Database consumption revenue climbed 47%, pointing to strong demand for Oracle’s core data products.
Cloud infrastructure remains the highlight. Total cloud revenue rose 27% YoY, while cloud infrastructure revenue soared 52% to $3 billion – making it Oracle’s fastest-growing segment. CEO Safra Catz called this a “tipping point” in the company’s cloud transition, projecting infrastructure growth to exceed 70% in fiscal 2026 and total cloud revenue growth above 40%. Notably, that 40% projection does not yet include Oracle’s anticipated role in the Stargate Project. The company raised full-year revenue guidance to over $67 billion – up 16%.
ORCL plans to invest over $25 billion in capital expenditures to expand its global data center footprint, reinforcing its push to lead in cloud and AI. Strategic partnerships with Amazon, Google, and Microsoft – along with its role in the multi-billion-dollar Stargate project – have positioned Oracle as a key AI player. Its cloud infrastructure (OCI) serves as both a platform and profit center for these ambitions.
The company’s bold targets have lifted investor sentiment, with multiple analysts issuing upgrades and price target hikes. Deutsche Bank called the results a “watershed moment” for Oracle’s cloud pivot, while Jefferies expects an OCI inflection and sees backlog growth as a further upside driver. Most analysts highlighted strong enterprise traction and accelerating OCI adoption.
❖ In other company news, Oracle (ORCL) has launched the Oracle Defense Ecosystem – a bold new initiative that reimagines how cutting-edge defense tech reaches the battlefield. Rather than building weapons, Oracle is creating the digital warfighting backbone: a secure, scalable cloud platform where AI, quantum, and sensor startups can rapidly develop and deploy next-gen capabilities for the U.S. and its allies. By offering infrastructure, compliance, and operational lift, Oracle aims to become the central nervous system of modern defense – accelerating innovation, unifying fragmented tools, and positioning OCI at the heart of a modular, interoperable, AI-first military tech stack. The Oracle Defense Ecosystem is planned as a system that U.S. and allied forces can plug into to outpace threats in both physical and digital domains.
❖ Taiwan’s Ministry of Economic Affairs has added Chinese tech giants Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC) – along with their affiliates – to its export control list. The new rules require that the world’s largest foundry TSMC (TSM) and other Taiwanese firms seek government approval before exporting key technologies. The new restrictions target advanced semiconductor-related tools, materials, and plant construction technologies, effectively curbing Huawei and SMIC’s ability to access Taiwan’s cutting-edge chipmaking ecosystem. The decision is widely seen as aligning Taiwan more closely with the United States in the ongoing tech trade war, bolstering Washington’s efforts to prevent China’s advancement in critical technologies with both civilian and military applications, including AI.
❖ Stifel Nicolaus initiated coverage of Uber (UBER) with a “Buy” rating and a $110 price target, implying a potential upside of over 28% from current levels. Stifel said it views Uber as a “super app” with multiple revenue streams ranging from deliveries to ride-hailing, with additional income derived from ads, as the firm sees Uber’s currently low advertising penetration as an opportunity. While still small in terms of revenue contribution, the ad segment is growing by about 60% year-over-year while requiring virtually no additional investment.
Moreover, Uber’s strategic approach to the increasingly material market disruption from AVs and robotaxis deserves praise. It leverages its existing strengths – a massive user base, rich data, demand density, optimized routing, and a payments platform trusted by over 170 million users – while leaving hardware and fleet investment to partners such as Alphabet’s (GOOGL) Waymo.
❖ The U.S. Department of Justice is reviewing Alphabet’s (GOOGL) planned $32 billion acquisition of cybersecurity firm Wiz for potential antitrust concerns, Bloomberg reports. The deal, Alphabet’s largest to date, would integrate Wiz into Google Cloud to bolster its cybersecurity offerings. While it is a preliminary antitrust review and not a lawsuit or formal challenge, it still signals heightened regulatory scrutiny. Google has agreed to a $3.2 billion reverse termination fee, highlighting the deal’s risk of regulatory derailment.
❖ Cisco Systems (CSCO) rose after Deutsche Bank upgraded the stock to “Buy” from “Hold,” raising its price target from $65 to $73. The bank’s analysts cited AI tailwinds, favorable near-term competition in networking, and improved scale in security as key upgrade drivers. They also noted that growth in higher-margin revenue streams and Cisco’s robust supply chain position the company well to absorb tariffs and reinvest in expansion. According to Deutsche, CSCO now has improved visibility into durable mid-single-digit growth over the coming years, with a projected 7–8% EPS CAGR supported by a stronger revenue mix and stable margins. Analysts also highlighted Cisco’s relatively moderate valuation versus peers, suggesting greater potential upside.
❖ Microsoft (MSFT) has launched its Sovereign Cloud in Europe, offering regionally compliant services to meet strict EU data privacy laws. The rollout includes Sovereign Public Cloud, Sovereign Private Cloud, and National Partner Clouds, ensuring customer data stays within Europe and is managed by local staff. The initiative builds on Microsoft’s EU Data Boundary commitment and includes a new “Data Guardian” framework. With plans to expand European data center capacity by 40% over two years, the move positions Microsoft to meet rising AI and cloud demand while strengthening trust with government and enterprise clients across the region. Backed by its OpenAI partnership and tailored compliance frameworks, Microsoft faces no real European rival at scale. It is now positioned to dominate the EU sovereign cloud market, especially in high-trust sectors, reinforcing its lead in cloud and AI.
❖ BlackRock (BLK) held its Investor Day last week, where it outlined a strategic roadmap to double its operating income to $15 billion and increase market capitalization to $280 billion by 2030. The firm plans to boost revenue from $20 billion in 2024 to $35 billion, targeting at least 5% organic base fee growth and maintaining a 45% operating margin.
A key part of this strategy is a significant expansion into private markets and technology, aiming for these segments to contribute 30% of total revenue by 2030, up from 15% in 2024. BlackRock is targeting $400 billion in private markets fundraising by 2030 and pursuing large acquisitions – such as Global Infrastructure Partners and Preqin – to deepen its capabilities in infrastructure, private credit, and data analytics, and to enhance offerings for institutional and retail clients.
The world’s largest asset manager is also taking a leading role in AI infrastructure, partnering with Microsoft (MSFT) and others through the AI Infrastructure Alliance to mobilize over $30 billion in U.S.-based investments, with potential to scale to $100 billion, aimed at building data centers and critical assets to support AI growth.
In crypto, BlackRock continues expanding its offerings, including the iShares Bitcoin Trust ETF (IBIT), which has rapidly gained assets since launch. As of June 10, IBIT has accumulated over 662,500 BTC, valued around $72 billion, making BlackRock the second-largest holder of Bitcoin globally and accounting for more than 3% of total supply. Launched less than a year ago, IBIT achieved this in just 341 days, becoming the fastest-growing ETF in history.
❖ Visa (V) fell nearly 4% last week after reports surfaced that Walmart and Amazon are exploring their own stablecoins to reduce card-related fees. However, JPMorgan’s analysts called the selloff overblown, noting that the original report focused more on treasury-related threats to banks than consumer payments. JPMorgan sees limited risk to Visa, citing low consumer incentives to abandon cards in favor of stablecoins for domestic use. Moreover, Visa continues to expand its crypto capabilities, including stablecoin settlements, suggesting it is adapting to potential shifts in the payments landscape.
❖ Interactive Brokers (IBKR) completed its 4-for-1 stock split, with shareholders of record as of June 16 receiving three additional shares for each share held after market close on June 17. The stock will begin trading at its adjusted price today, June 18. Announced on April 15, the split aims to make shares more accessible to a broader investor base. The move follows strong Q1 results, including a 19% revenue increase and a 50% rise in daily average revenue trades.
❖ Charles Schwab (SCHW) reported record core net new assets of $35B in May 2025, up 13% YoY, signaling renewed investor confidence. Total client assets rose to $10.35T, up 12% YoY and 5% from April. The firm added 336,000 new brokerage accounts, a 7% increase, while daily average trades topped 7 million for the fifth straight month, reflecting strong engagement. Transactional sweep cash fell $5.2B to $398.1B – a modest drop in context, but a lingering pressure point. However, overall momentum suggests Schwab is regaining its footing after prior headwinds in deposit flows and rate-driven balance sheet stress.
❖ Lockheed Martin (LMT) has had a volatile stretch, with a sharp rise on a flare-up in Middle East hostilities – along with its aerospace and defense peers – which was followed by a drop and then a renewed surge. Meanwhile, LMT seems to have found an additional strong catalyst beyond arming U.S. allies. On Monday, Lockheed and Boeing said they are positioning themselves to play leading roles in the development of the Golden Dome initiative, a missile defense program backed by President Donald Trump. Golden Dome is projected to cost up to $175 billion and seeks to establish a network of satellites to detect, track, and possibly intercept incoming projectiles. Tim Cahill, President of Missiles and Fire Control at Lockheed Martin, said that the company “clearly has a whole number of product lines that will contribute very well” to the initiative. Other companies in contention for early contracts include L3Harris and RTX (RTX).
❖ RTX (RTX) subsidiary Pratt & Whitney has secured a contract from Dynetics, a Leidos (LDOS) company, to supply TJ150 turbojet engines for the new Black Arrow cruise missile. The deal expands RTX’s presence in the fast-growing autonomous weapons space, with its compact, scalable engine offering high-altitude performance and rapid manufacturability. For Leidos, the partnership with RTX strengthens Dynetics’ role as a key missile integrator, signaling a strategic move deeper into weapons production. With follow-on orders possible, both companies stand to benefit from rising global demand for precision, low-cost, and export-ready defense systems.
In other company news, RTX will supply Pratt & Whitney GTF engines for 91 Airbus A321neo jets ordered by Frontier Airlines, reinforcing its leadership in the high-efficiency commercial engine market. The deal includes a long-term service agreement, securing decades of aftermarket revenue. As airlines increasingly prioritize fuel efficiency and emissions reductions, RTX stands to benefit from rising demand for its GTF platform while expanding its installed base in the narrowbody segment. Although financial terms were not disclosed, the deal is estimated at $2-2.8 billion. Given its scale and service component, the agreement is strategically significant for RTX, strengthening its commercial aviation foothold and ensuring long-term revenue from both engine sales and support.
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Portfolio Stocks Under Review
❖ We are keeping Leidos Holdings (LDOS) under review. Despite strong Q1 2025 results, reaffirmed full-year guidance, robust fundamentals, and strategic positioning, the stock has declined – underperforming both the S&P 500 and its industry peers. This downturn contrasts with the broader market’s performance and LDOS’s historical resilience, prompting a thorough evaluation of its role in our portfolio.
LDOS has demonstrated robust financial performance in Q1, reporting a 7% year-over-year revenue increase and a ~30% surge in EPS. The company’s $46.3 billion backlog reflects sustained demand for its services in defense, cybersecurity, and IT modernization. Recent contract wins, including a $205 million Defense Threat Reduction Agency (DTRA) task order in May 2025 and a $390 million National Security Agency (NSA) contract in April 2025, underscore its entrenched role in national security. Moreover, the Trump administration’s emphasis on national security and defense spending aligns closely with LDOS’s North Star 2030 strategy, which prioritizes digital modernization, artificial intelligence, and cyber capabilities. This strategic alignment positions Leidos to capitalize on long-term growth opportunities in a sector critical to federal priorities.
Despite these strengths, several factors appear to be driving LDOS’s recent stock weakness. On May 28, 2025, Leidos acquired Kudu Dynamics for approximately $300 million in cash, marking its first acquisition in over two years. Although the deal aims to enhance LDOS’s AI-enabled cyber capabilities – a high-growth area – integration risks and potential short-term earnings dilution may be causing investor caution. The market may be awaiting concrete evidence of operational synergies and revenue contributions before fully endorsing the acquisition.
Analyst opinions remain mixed. While several Wall Street brokerages raised their price targets – confirming their “Buy” ratings – Baird downgraded the stock to “Hold” from “Buy,” citing a challenging booking environment and increased uncertainty in the federal contracting space. Additionally, a recent market shift back toward growth and technology stocks may further marginalize defensive names like Leidos, limiting near-term upside potential. Without a clear trigger to reverse the decline, LDOS may struggle to regain short-term momentum in the current environment.
On the positive side, Leidos recently made headlines with a new contract from the Defense Innovation Unit (DIU) to develop a quantum navigation system designed to operate in GPS-denied environments. The company will use advanced diamond-based sensors to map Earth’s magnetic field – a cutting-edge application of quantum technology. Developing a quantum-based navigation system using nitrogen-vacancy diamond sensors is a massively complex task – requiring deep expertise in quantum sensing and magnetometry, the ability to translate cutting-edge research into deployable, ruggedized defense systems, and proven experience in integrating advanced technology into military platforms – capabilities only a handful of U.S. firms possess. Leidos has worked in quantum domains for years, applying its expertise to cybersecurity and sensing applications – a track record that led DIU to choose the company for this mission. This project underscores Leidos’s expanding technical depth and its ability to convert high-end R&D into field-ready systems. Just as important, it reaffirms the government’s confidence in Leidos to lead top-tier defense programs that demand both innovation and trust.
Taken together, this reinforces our view that LDOS retains significant long-term potential. The company’s alignment with national security priorities, bolstered by the administration’s focus on defense and cybersecurity, positions it well for sustained demand. Its strong backlog and recent contract wins attest to operational resilience, while the Kudu Dynamics acquisition could enhance its competitive edge in AI and cyber markets over time. Moreover, LDOS’s valuation metrics suggest the stock may be undervalued, offering an opportunity for patient investors.
We will closely monitor LDOS news flow and stock performance, weighing its compelling long-term outlook against near-term pressure on the stock.
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Portfolio Earnings and Dividend Calendar
❖ The Q1 2025 earnings season is over, with no Portfolio companies scheduled to post their results in the coming week.
❖ The ex-dividend date for Salesforce (CRM) is June 18, while for Broadcom (AVGO) it is June 20.
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New Buy: Emerson Electric Company (EMR)
Emerson Electric develops and delivers advanced automation technologies and industrial software that support critical operations across the energy, manufacturing, life sciences, and infrastructure sectors. The company enables customers to optimize performance, reduce emissions, and improve reliability through a combination of intelligent devices, control systems, and digital engineering platforms. Emerson’s portfolio spans both hardware and software – from field-level instrumentation to enterprise-scale analytics – providing end-to-end solutions for process and discrete industries alike. Its technologies are integral to modernizing aging infrastructure, accelerating the energy transition, and supporting resilient, data-driven operations. With a global footprint and a strategic focus on innovation, Emerson is increasingly aligned with long-cycle capital investment trends and the shift toward digital industrial ecosystems. As automation and electrification gain momentum worldwide, Emerson is well-positioned to remain a mission-critical partner to global industry.
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Engineered Evolution
Emerson’s roots stretch back over 130 years, but its current shape has been defined by a sweeping transformation over the past five. Historically a diversified industrial conglomerate, Emerson has steadily narrowed its focus to become a high-performance automation and software company – deeply embedded in global infrastructure, energy, and industrial markets. This transformation was driven by a pivot from legacy businesses to scalable platforms aligned with long-cycle capital investment and digitization.
A major inflection point came with the multistep divestiture of Emerson’s Climate Technologies business, culminating in the 2023 sale of a majority stake to private equity. That move, along with earlier exits from network power and tools businesses, marked a clear shift toward automation and software as Emerson’s core identity. Simultaneously, the company reinvested heavily into higher-growth verticals. In 2022, Emerson took a controlling stake in AspenTech, a global leader in industrial optimization software – cementing its position in high-value digital engineering and process modeling. In 2025, Emerson completed the full buy-in of AspenTech, folding it into a dedicated software segment alongside other strategic assets.
Another transformational acquisition followed in 2023 with the purchase of National Instruments (NI), a major provider of test and measurement systems used in semiconductor, aerospace, and electronics development. The deal added mission-critical hardware and software capabilities to Emerson’s discrete automation portfolio – helping round out its offering across the full lifecycle of industrial and electronic system design.
Since then, the company’s focus has shifted to integration and execution. While bolt-on acquisitions remain a future option, capital allocation priorities for 2025-2026 are centered on deleveraging, buybacks, and internal investment – not large-scale M&A.
Operationally, EMR has overhauled its internal structure and management system to drive margin expansion and execution. The rollout of the Emerson Management System formalized the company’s focus on operational excellence, integration synergies, and accountability. At the same time, Emerson invested in supply chain localization to reduce tariff exposure and improve cost competitiveness.
Strategic partnerships and R&D investments have also been central to this evolution. Emerson has deepened its collaborations with energy and life sciences customers around grid modernization and advanced energy infrastructure, and expanded its automation reach into electrification and emissions-reducing technologies. Across segments, the company has sharpened its portfolio around secular growth themes – process automation, software-defined manufacturing, industrial AI, and digital twin simulation.
The result is a more focused and agile Emerson – one positioned for long-term relevance in the global industrial transformation now underway. While portfolio reshaping is largely complete, the growth flywheel from recent moves is still accelerating.
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The Control Layer
Emerson operates at the intersection of automation, industrial software, and intelligent devices – enabling global infrastructure, manufacturing, and energy systems to run more efficiently, safely, and intelligently. The company focuses on two main segments: Intelligent Devices (roughly 65% of sales) and Software and Control (about 35%), with a growing share of high-margin software thanks to its full ownership of AspenTech and the integration of National Instruments.
EMR addresses a total addressable market (TAM) estimated at over $160 billion, spanning process automation, industrial software, test systems, and discrete automation. Its customer base includes power utilities, oil & gas, chemicals, life sciences, semiconductor and electronics firms, and water treatment operators – many of which are engaged in long-cycle capex projects or mission-critical process environments. The business is globally distributed: about 50% of sales come from the Americas, 20% from Europe, and 30% from Asia – with only ~11% of total revenue directly tied to China, a notably low exposure for a global industrial supplier.
This limited reliance on China – combined with Emerson’s long-running regionalization strategy – has helped shield it from escalating tariffs and trade restrictions. Over 80% of its cost of goods sold in the Americas is sourced regionally, and similar localization levels exist in Europe and Asia. This footprint allows the company to serve local markets with fewer cross-border supply dependencies. For U.S. operations in particular, Emerson now sources much of its hardware from North America and Southeast Asia, sidestepping tariff-sensitive Chinese imports while remaining cost-competitive under USMCA rules.
The company’s growth prospects are underpinned by structural trends in grid modernization, infrastructure upgrades, equipment lifecycle replacement, and industrial reshoring. Emerson is a leading supplier to LNG exporters, grid operators, and large chemical and pharmaceutical facilities – markets investing heavily in process control upgrades, operational efficiency, and infrastructure modernization.
Its software stack, led by AspenTech, is seeing rising demand for digital twins, predictive analytics, and real-time optimization tools. In discrete automation and test systems, Emerson’s National Instruments unit supports sectors such as semiconductors, aerospace, and electronics – all of which are increasingly driven by AI-intensive design cycles and electrification. Though not a direct supplier to hyperscale data centers, EMR has indirect but growing exposure to AI and digital infrastructure, particularly through test and validation systems used in chip development and high-performance computing. The company also collaborates with engineering firms and EPC contractors delivering power, grid, and advanced manufacturing capacity – foundational to the AI and semiconductor buildout now underway.
Though not publicly detailed, Emerson holds multiyear supply agreements with top-tier energy, life sciences, and industrial OEM customers. In energy and chemicals, it frequently plays the role of primary automation contractor (PAC) on billion-dollar global projects – a position that deepens customer ties and expands lifecycle revenue. Combined, these capabilities position Emerson as a high-utility, low-volatility growth platform embedded in the reinvention of global industry.
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Precision Gains
Emerson delivered a strong fiscal Q2 2025 – marked by robust order activity, margin expansion, and continued execution on cost discipline and integration. Underlying orders rose 4% YoY, exceeding internal expectations and signaling durable demand, particularly in process and hybrid markets. Reported revenue came in at $4.43 billion, up 1% YoY and 2% on an underlying basis – steady but not a beat. However, strength in high-margin software and control businesses supported a 9% YoY increase in adjusted EPS to $1.48, topping analyst expectations of $1.42 and extending Emerson’s six-quarter streak of EPS beats, despite no such consistency in revenue.
Adjusted segment EBITA margin reached a record 28.0%, up 200 basis points from the prior year – driven by price realization, cost synergies from AspenTech and National Instruments, and continued productivity improvements under the Emerson Management System. Gross margin also reached an all-time high of 53.5%, supported by favorable mix and operational leverage, a standout at 180%.
Free cash flow rose 14% YoY to $738 million, with a 17% FCF margin, reflecting strong conversion of earnings and disciplined working capital management. Year-to-date, EMR has generated over $1.6 billion in operating cash, and it expects full-year FCF between $3.1-3.2 billion, even after absorbing ~$200 million in transaction-related costs.
For full-year FY2025, Emerson raised the adjusted EPS guidance to $5.90-6.05, citing strong first-half execution, cost management, and improving visibility into backlog conversion. Revenue is still expected to grow approximately 4%, with underlying sales also tracking at ~4%. Importantly, management reaffirmed expectations for accelerating growth in the second half, particularly in discrete automation, where early signs of demand recovery are emerging. Bookings data and trailing order trends support this view, with discrete markets shifting from contraction to modest growth, and software demand remaining resilient.
Tariff pressure remains a headwind. The company anticipates $245 million in gross incremental tariff costs in 2025, largely tied to U.S.-China trade restrictions and semiconductor-related imports. Meanwhile, China demand remains muted, especially in factory automation. However, Emerson is relatively insulated: only ~11% of total revenue is China-related, and over 80% of cost of goods sold in the Americas, Europe, and Asia is regionally sourced, reducing exposure to cross-border disruptions.
Despite modest revenue growth, Emerson’s financial profile shows clear strength – with rising margins, reliable cash generation, and high earnings quality continuing to outpace expectations. Portfolio moves over the past two years are beginning to yield tangible results: the integration of AspenTech is on track, with $100 million in cost synergies targeted by 2028, and the National Instruments acquisition has opened new avenues in test and measurement. These additions are shifting Emerson’s mix toward higher-margin, software-centric offerings, which – along with strong execution – supports double-digit EPS growth in FY2025 despite only mid-single-digit sales growth. That margin-led model provides a degree of resilience in an uncertain macro environment and positions Emerson well for long-term value creation.
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Return Logic
Emerson’s stock has gained nearly 20% in the past 12 months – outperforming broad indexes, Industrial sector ETFs, and all but one of its peers. After hitting an all-time high in late 2024, EMR pulled back alongside broader tech and industrial names amid renewed tariff concerns and fears of a macro slowdown. However, when investor sentiment turned positive, Emerson staged a stellar recovery, surging by over 36% from the early April trough.
Despite the rebound, EMR is still trading at attractive valuations. Although trading at higher TTM and forward non-GAAP P/E ratios than the Industrial sector median, its relatively modest (~13%) premium is justified by its industry leadership, consistent EPS outperformance, and strong cash generation. In any case, this multiple doesn’t appear stretched.
Moreover, when compared to its closest peers, Emerson’s multiples appear to be moderate. EMR comes towards the middle of the peer valuation scale on TTM and forward non-GAAP P/E and EV/EBITDA ratios, as well as other metrics, including TTM and forward EV/Sales, TTM Price/Sales, and TTM Price/Cash Flow. At the same time, Emerson’s stock is the cheapest among its peer group in terms of forward PEG multiple. This setup underscores that EMR offers the best relative value among peers when factoring in forward earnings growth – a classic case of quality growth that remains underappreciated by the market.
Overall, Emerson stands out as a high-quality, globally diversified industrial with improving margins and a shareholder-friendly approach – and its valuation does not demand an excessive “growth premium.” However, EMR surpasses its peers on past and projected revenue and EBITDA growth, as well as forecasted adjusted EPS growth. In terms of risks, Emerson has a beta of ~1.25, reflecting moderate volatility – typical for a cyclical industrial.
Besides potential stock gains, Emerson rewards its shareholders through dividends and buybacks, with $2.3 billion slated to be returned over FY 2025. EMR is a Dividend King with a track record of consistent annual dividend increases spanning 68 years – one of the longest-running dividend growth streaks among publicly traded companies. This persistent payout growth – through various economic cycles, including recessions and downturns in the sector – highlights Emerson’s resilience and disciplined approach to capital allocation. Its dividend yield of roughly 1.7% is considerably above its sector average, while its conservative payout ratio – coupled with robust cash generation – provides a margin of safety and supports the outlook for further dividend growth.
In addition, in recent years Emerson has significantly increased its buyback activity. In March 2020, Emerson announced a share repurchase program authorizing up to 60 million shares over several years. Under this plan, EMR repurchased approximately $1.0 billion worth of its common stock in fiscal 2024. In May, the company said it allocated $1.1 billion for buybacks in fiscal 2025, with that capacity depleted over the first half of fiscal 2025 (ending March 31, 2025).
With a balanced mix of earnings momentum, disciplined capital returns, and compelling relative valuation, Emerson remains well-positioned to deliver durable shareholder value without demanding a growth premium.
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Investing Takeaway
Emerson is a high-quality industrial automation and software platform embedded across essential sectors like energy, manufacturing, and advanced technology infrastructure. Following a strategic portfolio transformation, the company now leans into higher-margin, resilient growth areas – including process control, test systems, and industrial software. Emerson’s leadership in mission-critical automation, combined with disciplined execution, strong cash generation, and a shareholder-aligned capital return strategy, support durable earnings power. Its exposure to reshoring, grid modernization, and precision manufacturing creates long-cycle relevance amid global industrial shifts. Despite a strong equity recovery, Emerson remains reasonably valued relative to its growth profile. With a clear margin trajectory, a scalable operating model, and an expanding role in next-generation infrastructure buildouts, Emerson offers a rare blend of stability and upside – positioning it as a core GARP holding for investors seeking quality in an uncertain macro backdrop.
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Smart Investor’s Winners Club
The 30% Winners Club includes stocks from the Smart Investor Portfolio that have risen at least 30% since their purchase dates.
Markets have ebbed and flowed, but our Winners list has remained unchanged, still holding 13 stocks: GE, AVGO, HWM, ORCL, ANET, EME, TSM, APH, TPL, IBKR, PH, CRWD, and IBM.
The first contender for the Club’s entry is still UBER, with an 18.45% increase since purchase. Will it gain this rite of passage, or will another stock outrun it to the finish line?
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Disclaimer
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