Emerson’s first quarter results for 2025 were well received by the market, as the company delivered sales and adjusted profits above Wall Street’s expectations. Management attributed the performance to strong demand in its process and hybrid businesses and early recovery signs in discrete markets, particularly in test and measurement. CEO Lal Karsanbhai noted that underlying orders growth exceeded expectations across all regions, including China, and highlighted improvements in gross margin and operational efficiency. Profitability gains were further supported by successful cost control measures and synergy realization from recent integrations, especially in the software and control segment.
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Emerson Electric (EMR) Q1 CY2025 Highlights:
- Revenue: $4.43 billion vs analyst estimates of $4.38 billion (1.3% year-on-year growth, 1.1% beat)
- Adjusted EPS: $1.48 vs analyst estimates of $1.41 (4.6% beat)
- Adjusted EBITDA: $1.24 billion vs analyst estimates of $1.21 billion (28% margin, 2.9% beat)
- Revenue Guidance for Q2 CY2025 is $4.60 billion at the midpoint, above analyst estimates of $4.54 billion
- Management slightly raised its full-year Adjusted EPS guidance to $5.98 at the midpoint
- Operating Margin: 19.8%, up from 17.1% in the same quarter last year
- Market Capitalization: $77.85 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Emerson Electric’s Q1 Earnings Call
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Andrew Obin (Bank of America Merrill Lynch) asked which discrete end markets were improving. CEO Lal Karsanbhai cited gains in test and measurement and MRO, but noted continued weakness in automotive and factory automation.
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Scott David (Melius Research) questioned the strategic benefits of fully integrating AspenTech. Karsanbhai emphasized accelerated growth opportunities and synergy potential, with COO Ram Krishnan adding that software-defined automation will be enabled by the acquisition.
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Deane Dray (RBC Capital Markets) inquired about the decision to retain the Safety and Productivity segment. Karsanbhai replied the business offers strong profitability and cash generation, aligning with U.S. manufacturing trends.
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Andy Kaplowitz (Citigroup) asked about profit leverage and the impact of cost controls. CFO Mike Baughman explained that margin gains were driven by mix, cost reduction, and synergy realization, but expected leverage to moderate in the second half due to tariffs and timing.
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Joe O'Dea (Wells Fargo) sought more detail on test and measurement demand. Karsanbhai highlighted strong growth in aerospace, defense, and the broad portfolio, with recovery in semiconductors expected later in the year.
Catalysts in Upcoming Quarters
In the coming quarters, our team will be tracking (1) the pace of recovery in discrete automation, particularly test and measurement and factory automation end markets, (2) progress on integrating AspenTech and realizing targeted cost and technology synergies, and (3) the effectiveness of tariff mitigation actions in preserving margins. Additional attention will be paid to new project awards in process and hybrid sectors and updates on the Safety and Productivity segment’s performance.
Emerson Electric currently trades at $138.46, up from $107.29 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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