Can Emerson Electric Navigate Headwinds From Declining Orders?

Referring to Emerson Electric Co. EMR, Baird Equity Research, in its note published on Wednesday, stated the company's orders remain weak, and the firm sees no sign of improvement in the future.

L3M underlying orders dropped 6 percent year-on-year in May, "reflecting continued mid-single-digit declines despite easing comparisons" and driven by declines in oil and gas spending levels, persistently lower industrial demand and unfavorable weather in the United States for climate technologies. As a result of poor order trajectory, management plans to increase restructuring spending to $90–100 million in fiscal 2016 year from $70–80 million mentioned previously.

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"With no signs of improvement in underlying orders, we remain on the sidelines and await an inflection in underlying demand and/or better entry point," said Baird.

The analysts kept their Neutral rating on Emerson Electric. They have a $58 price target based on earnings multiple of 16.7 attached to the rating.

At time of writing, Emerson Electric was down 5.42 percent on the day, trading at $50.76.