Emerson Electric Reports Solid Profitability, But Lowered Guidance And Sales Miss Weigh Heavily On Stock

Emerson EMR stock slipped on Wednesday after the company reported fiscal third-quarter 2025 results that narrowly beat earnings expectations but missed on revenue.

Adjusted earnings per share came in at $1.52, slightly above the consensus estimate of $1.51. GAAP EPS rose 72% to $1.03, up from $0.60 in the prior-year quarter.

Revenue increased 4% year over year to $4.55 billion, falling short of the $4.60 billion analyst estimate.

Pretax earnings climbed to $734 million from $455 million, with margins expanding to 16.1% from 10.4%. Adjusted segment EBITA rose to $1.23 billion, maintaining a 27.1% margin.

Performance was strongest in the Intelligent Devices segment, which generated $3.13 billion in revenue, up 4%, with an adjusted EBITA margin of 24.4%. The Software and Control segment reported $1.44 billion in revenue, a 3% increase, while Control Systems & Software delivered a margin of 35.9%.

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Final Control sales rose 7% to $1.12 billion with a 26.2% margin. Measurement & Analytical grew 3% to $1.01 billion. Discrete Automation was up 5% at $649 million, while Safety & Productivity fell 1% to $346 million.

Geographically, sales in the Americas increased by 7%, while those in Europe declined by 7%. The Asia, Middle East & Africa region saw a modest 2% increase.

Operating cash flow totaled $1.062 billion, nearly flat from $1.067 billion a year ago, reflecting continued operational strength and cash discipline. Free cash flow declined 1% to $970 million.

Emerson ended the quarter with $2.22 billion in cash and equivalents, down from $3.59 billion at the start of the fiscal year.

“We are experiencing positive momentum in key end markets, and our team’s ability to execute in this dynamic environment demonstrates the resilience of our business model and our operational excellence,” said CEO and president Lal Karsanbhai.  

“We are taking pivotal steps to advance our industrial software capabilities, launching breakthrough innovations that are transforming how our customers optimize their operations. We deliver value by unlocking productivity and efficiency, and we are seeing accelerated adoption of our digital solutions,” he continued.

Outlook:

For fiscal year 2025, Emerson narrowed its adjusted EPS guidance to approximately $6.00, up from a prior range of $5.90–$6.05 and slightly above the $5.98 analyst estimate. The company also lowered its GAAP EPS forecast to $4.08, down from a prior range of $4.05–$4.20 and below the $4.25 consensus.

Full-year sales are now projected at $18.10 billion, with 3.5% YoY growth, down from the previous forecast of $18.19 billion but in line with the $18.10 billion estimate.

In the fourth quarter, Emerson expects adjusted EPS between $1.58 and $1.62, compared to the $1.62 analyst estimate. GAAP EPS is expected to range between $1.13 and $1.17, below the $1.34 consensus. Revenue is forecast between $4.87 billion and $4.92 billion, representing 5.5%- 6.5% growth YoY, slightly missing the $4.92 billion estimate.

The company noted reduced tariff exposure as part of its updated pricing expectations and highlighted ongoing macroeconomic and geopolitical risks, including cybersecurity threats, inflation, and global conflicts.

Price Action: EMR shares are trading lower by 8.99% at $128.40 premarket at the last check on Wednesday.

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