EMR Earnings Preview: Largely de-risked going into the quarter

研报英文原文证据摘录

EMR Earnings Preview: Largely de-risked going into the quarter

Varun Govindaraj +1 917 344 8543 varun.govindaraj@bernsteinsg.com 20 July 2026

DETAILS

We think Emerson is relatively well-set up going into the quarter. Post-2QFY26, management has done a good job managing

down negative surprises. From our conversations with investors, we get the sense that the stock is being viewed positively

(albeit with a bit of caution based on continuing developments in the Middle East). Short interest is the lowest it has been YTD.

Drivers behind a weaker growth year: Recall, Emerson has a long-term organic growth target of between 4 - 7%. We think

valuation is largely going to be driven by the growth story looking ahead; margins (mid-term target of 30% EBITA) should largely

be achieved with incrementals around 40%. Emerson has guided the full year to be ~3% organic in the 2Q call (down from 4%

from the previous guide) so bad news is already priced in. However, this includes about 1% from the renewal impact of software

and another 1% from ongoing uncertainty in the Middle-East so the real organic number is closer to 5% once that is accounted

for on a normalized basis. Theoretically, all this demand is simply deferred and we’d expect it to materialize in FY27 (more likely

for software renewals, while for the Middle East it depends on conflict resolution timelines).

Expectations going into the print: We think the street is really just expecting EMR to meet guidance (likely closer to the

upper end of their range). We’ve not heard anything to indicate that the buy-side bogey is well ahead / below where sell-side

consensus sits.

Room for surprises: Broadly speaking, we think there isn’t going to be anything materially unexpected this quarter from

Emerson.