Wednesday, October 22, 2014

Time to Buy Emerson Electric Stock?

Emerson Electric's (NYSE: EMR  )  stock is down 7.6% year to date, as I write. With that said, there are signs the company could finish 2014 on a strong note. The global economy is set for a better second half, and management is actively restructuring the business in order to generate earnings growth. Does the dip in the share price create a buying opportunity for investors?

The story of 2014
Readers looking for some background material on this manufacturing and technology company can read a recap of its last conference call here, along with the bull and bear cases for the stock.

In a nutshell, management has been doing a pretty good job in raising its operating margin to a record level, and the company's cash flow conversion remains strong. However, a combination of geopolitical uncertainty and weaker than expected global growth has slowed customer spending. As such, Emerson's sales growth is trending toward the low end of its full-year target for 3%-5% growth.


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