Emerson Electric EMR

> ## ⚠ RESULTS AND A GUIDANCE RAISE RELEASED THE MORNING OF THIS DIVE

>

> Emerson issued its fiscal third-quarter release on 2026-08-04 — "Emerson Reports Third Quarter 2026 Results; Raises 2026 Outlook" — and filed its 10-Q the same day. Both are in this archive with tables preserved, so every figure below is filing-verified through 2026-06-30.

>

> The quarter: net sales $4,873M (+7%), underlying sales +6%, UNDERLYING ORDERS +7%, pretax margin 18.8% (+270bp), adjusted segment EBITA margin 28.5% (+140bp), GAAP EPS $1.28 (+24%), adjusted EPS $1.71 (+13%), operating cash flow $1,425M (+34%), free cash flow $1,323M (+36%).

>

> Guidance RAISED: fiscal 2026 adjusted EPS to approximately $6.55, free cash flow to approximately $3.6 billion.

>

> The shares closed +2.60% at an RSI of 77.8 — the only reading above 70 in this batch. The verdict below is set with that as a direct input.

Reference table

1. The June quarter, and the guidance raise

All figures from Exhibit 99.1 to the 8-K filed 2026-08-04, tables preserved. Emerson's fiscal year ends 30 September, so this is fiscal third-quarter 2026.

Management's own words, quoted in full because the framing matters and is half-weighted:

> "Emerson had an outstanding third quarter with sales, margin expansion, earnings and cash flow all exceeding expectations... Demand was robust, with underlying orders up 7%, led by Software & Systems and broad-based growth in North America and Asia. The conflict in the Middle East remains fluid, and I am proud of our team's ability to deliver results and support our customers around the world."

> "We are raising our full year guidance, reflecting our strong third quarter performance and healthy demand. Secular tailwinds continue to support sustained investment in our growth verticals..."

Note that the chief executive names the Middle East conflict in a results statement — the third name in this batch to do so, after Marathon Petroleum (whose refining margin doubled because of it) and Marriott (whose international RevPAR fell 0.5% because of it).

The business units — this is where the growth is

Two things to read out of that.

Test and Measurement — the former National Instruments business — grew 23% in the quarter and 18% over nine months. It is the smallest unit at $445M a quarter and by far the fastest. Whether that is genuine share gain or a rebound off a weak base is the medium-term question, and this archive cannot settle it.

Control Systems and Software accelerated sharply: +3% over nine months and +7% in the quarter. Combined with the chief executive's attribution of the 7% order growth to "Software & Systems", that is the software mix shift showing up in the numbers for the first time in this file.

The guidance, raised

Three observations on the bridge, and they matter for every multiple in this dive.

The adjustment is $1.66 per share, 34% of guided GAAP earnings, and 84% of it is intangible amortisation. Emerson carries $9,458 million of intangibles from AspenTech, National Instruments and earlier deals. That amortisation runs for years and is not a one-off in any meaningful sense. On guided GAAP earnings of ~$4.89 the stock is 32.5x; on guided adjusted earnings of ~$6.55 it is 24.3x. Both are published here and consensus uses the adjusted basis.

There is a tariff refund in the guidance. "IEEPA tariff refunds ~($0.11)" is a negative adjustment, i.e. a gain being excluded from adjusted earnings — approximately $62 million on 560 million shares. It will not repeat.

The company guides full-year underlying sales growth at approximately 3.5% while the June quarter delivered 6% and Q4 is guided at approximately 5%. The arithmetic implies the first half was materially weaker, which the nine-month business-unit growth rates confirm (+3%, +4%, +4%). The 6-7% quarter is the good end of the year, not the run rate.

2. Balance sheet, cash flow and the facility that shrank

Three things.

Goodwill and intangibles of $27,651M are 65.9% of total assets and 136% of equity. Tangible book value per share is MINUS $12.10, so priceToBookRatioTTM of 4.39x is on a book value that contains no tangible assets net of liabilities. returnOnEquityTTM is not in ratios_ttm and is not in km_ttm either on this name — the block is truncated, so no return-on-equity figure is available from the payload at all. We use returnOnInvestedCapitalTTM and note the gap.

The minority interest collapsed from $5,909M to $16M between the two balance dates. That is the AspenTech buy-in: Emerson moved from majority to full ownership, extinguishing the noncontrolling interest. cf_a reports acquisitionsNet of ZERO for FY2025, which is technically correct — purchasing the remaining stake in an already-consolidated subsidiary is an equity transaction recorded in financing, not an acquisition — but it means the payload contains no trace of a roughly $6 billion transaction. Anyone reading cf_a alone would conclude Emerson made no acquisitions in fiscal 2025.

The company funds itself short. Short-term debt of $4,797M is 3.1x the $1,544M cash balance, and the current ratio is 0.868 with negative working capital of $1,403M. That is normal for a large investment-grade industrial running a commercial-paper programme — and it makes the backup facility important.

The corporate action the payload never saw

From Item 2.03 of the 8-K filed 2026-02-13, verbatim:

> "On February 10, 2026, Emerson Electric Co.... entered into a $2 billion 364-Day Credit Agreement... The 364-Day Credit Facility expires on February 9, 2027. There are no outstanding loans or letters of credit under the 364 Day Credit Facility. The Company has not incurred any borrowings under this or prior similar facilities, and has no current intention to do so. The 364-Day Credit Facility supports general corporate purposes, including as a liquidity back-up for the Company's commercial paper borrowings."

> "The facility replaces the Company's $3 billion 364-Day Credit Agreement entered into on February 11, 2025, which expired by its terms."

A $2 billion facility replacing a $3 billion facility is a one-third reduction in committed backup liquidity, for a company with $4,797 million of short-term debt against $1,544 million of cash. Emerson has never drawn on it and says it has no intention to, and the reduction most plausibly reflects a smaller commercial-paper programme after the AspenTech buy-in was financed — but it is a material financing fact and it appears nowhere in the vendor payload.

Cash flow

Free cash flow is computed by subtraction and the arithmetic is correct in all four years. capexToDepreciationTTM of 0.28x is well below 1.0 — the corruption signature — but it is explained rather than suspicious: D&A of $1,518M includes intangible amortisation guided at approximately $1.39 per share, roughly $780 million a year, so real depreciation is nearer $740 million against $431 million of capex, a ratio of about 0.58x. That is still low, and it is the correct reading of an asset-light-ish industrial that has bought its growth: the depreciation line is dominated by purchase accounting, not by plant. The FY2023 outlier — operating cash flow of $637M — is the Copeland divestiture year and is not comparable.

The company's own guided free cash flow of ~$3.6 billion against an $88.99 billion market capitalisation is a 4.05% yield, materially above the vendor's freeCashFlowYieldTTM derivation, because the guidance is forward and the trailing figure includes the weaker first half. Both are stated.

3. Segments and geography — both vendor blocks tie

seg_prod FY2025: Intelligent Devices $12,400M + Software and Control $5,691M = $18,091M against inc_a revenue of $18,016M — 100.4%. Ties. But note the block reports TWO lines while the earnings release reports FOUR business units, so the Test and Measurement and Control Systems and Software detail that carries the growth story is invisible in the payload and available only from the release.

seg_geo FY2025: Americas $9,214M (51.1%) + Asia, Middle East & Africa $5,449M (30.2%) + Europe $3,428M (19.0%) = $18,091M against $18,016M — 100.4%. Ties, correctly labelled, three genuine regions, no aggregate double-counting.

Both blocks clean — recorded as a finding, and notable because four of the twelve names in this batch have a broken geography block (UPS at 72.8%, MRSH at 162.8%, WM with the US line absent, MAR with the US line absent).

What the geography shows: Asia, Middle East and Africa is 30.2% of revenue and grew 2.5% in FY2025, Americas 51.1% and grew 4.7%, Europe 19.0% and FELL 0.5%. The chief executive's reference to "broad-based growth in North America and Asia" in the June quarter is therefore an improvement on the annual pattern, and Europe is the region to watch.

4. Valuation — priced in or room?

At $158.88 (market cap $88.99B, ~560.1M shares implied):

Estimate coverage is good through FY2028 — 16, 18 and 7 analysts on EPS — and collapses to 2 at FY2029. The FY2029 and FY2030 rows are excluded from every conclusion. The FY2027 EPS range is $6.934 to $7.357, a 6.1% spread — the narrowest in this batch alongside MRSH, which is what a well-modelled industrial with company guidance looks like.

The guidance calibration is worth recording: management's ~$6.55 for FY2026 sits 0.7% ABOVE the consensus $6.506, and the FY2026 consensus range is only $6.446 to $6.556 — a 1.7% spread. The near year is effectively settled; everything in the valuation is about FY2027 and beyond.

est.ebitdaAvg and est.ebitAvg are REJECTED for TWO independent reasons. First, the fixed-ratio signature: ebitdaAvg is exactly 31.42% of revenueAvg and ebitAvg exactly 19.03% in every year FY2026 through FY2030. Second, and decisively: netIncomeAvg EXCEEDS ebitAvg in EVERY forward year — $3,657M against $3,581M (FY2026), $3,971M against $3,777M (FY2027), $4,329M against $3,973M (FY2028), $5,170M against $4,267M (FY2029), $5,707M against $4,532M (FY2030). Net income cannot exceed operating income for a company that pays interest of $387M and tax at 21.2%. This is the same impossibility class found on COF and, in a different form, on ABNB in this batch. All forward valuation uses epsAvg. Twentieth consecutive name.

Peer set is a market-capitalisation cohort with two genuine comparables. CMI, CTAS, HWM, ITW, JCI, NOC, PH, TDG, UPS, WM. Parker-Hannifin is the closest business comparable; Illinois Tool Works and Johnson Controls are adjacent. UPS and WM are in this same research batch and are not automation businesses. The payload carries no peer estimates, so no multiple comparison is computed.

4a. What today's price assumes (the inversion)

At $158.88 — 24.4x fiscal 2026 consensus, 22.1x fiscal 2027 — the price embeds:

• Adjusted EPS of $6.51 in FY2026 and $7.20 in FY2027. (Consensus 16 and 18 analysts; company guides ~$6.55 for FY2026.) The FY2026 number is effectively settled — nine months are reported and Q4 is guided at ~$1.85 against a 1.7%-wide consensus range. The valuation question is entirely FY2027's $7.196, a 10.6% increase.
• Underlying sales growth improves from the guided ~3.5% toward 5%. (Company guidance for Q4 is ~5%; consensus revenue growth for FY2027 is 5.5%.) This is the most fragile assumption in the price. The June quarter delivered 6% underlying and the nine-month business-unit rates were +2% to +4%. The 7% order growth supports it; the nine-month record does not yet.
• Adjusted segment EBITA margin holds near 28.5%. (Company disclosure, half-weighted.) It expanded 140 basis points year on year in the quarter. Roughly half of the consensus FY2027 earnings growth is margin, and margin expansion of that pace does not compound indefinitely.
• Intangible amortisation of ~$1.39 per share continues to be excluded. (Company presentation.) On guided GAAP earnings the stock is 32.5x, not 24.3x. The entire multiple discussion depends on the market continuing to accept the adjusted basis, which it has for years and which is standard for acquisitive industrials — but a reader should know that roughly 21% of "earnings" is a non-cash charge for assets already paid for.
• The market keeps paying 20-25x forward adjusted earnings. (Our number.) At 20x FY2027E the stock is $144; at 25x it is $180. Emerson has occupied roughly an 18-24x forward band; 22.1x is at the upper end.

4b. The return bridge (why the multiple moves)

Expected return over the next twelve months decomposes as: adjusted EPS growth (+10.6%, from FY2026E $6.506 to FY2027E $7.196) + multiple drift (MODEST EXPANSION; our base of $168 is 23.3x FY2027E against 22.1x today, +5.7%) + shareholder yield (approximately +2.5%: ~$1B of buyback and ~$1.2B of dividends against an $88.99B market capitalisation) ≈ +17% if the re-rating comes and roughly +13% if it does not.

Our base assumes a modest multiple expansion and names it as the fragile leg — and here it is more fragile than usual, because 22.1x is already at the upper end of the band this business has occupied. The argument for it: underlying orders +7%, a software mix shift showing in the numbers for the first time, the only guidance raise in this batch, a 4.05% guided free-cash-flow yield, and a stated pivot to capital return. The argument against it: full-year underlying growth guided at ~3.5%, RSI at 77.8, and a consensus price target 2.2% above the close.

If the multiple simply holds at 22.1x, fair value is roughly $159 — spot — and the return is 10.6% of earnings growth plus 2.5% of yield. That is the honest floor and it is why this is a Hold rather than anything warmer.

4c. Variant perception (where we differ, what would surprise)

• On the level we are 3.4% above the street's $162.40 and 5.7% above spot, which is exactly the street's own median of $168. We have no variant perception at all and we say so. The more useful observation is the shape of the street's view: a consensus target 2.2% above the close, 22 buys against 16 holds and 3 sells, and a HIGH target of $185 that is only 16.4% away. On a stock that just rose 2.6% on a guidance raise, that is a covering community with nothing left to say.
• Where we do differ is on how much of the good news is already in the quarter rather than in the future. Full-year underlying sales growth is guided at approximately 3.5% while the June quarter delivered 6% — so the first half was materially weaker, which the nine-month business-unit growth rates confirm at +2% to +4%. Watchable number: underlying ORDERS in the November print. Orders led sales by a point in the June quarter (+7% against +6%); if that gap widens the FY2027 consensus of $7.196 is too low, and if orders fall to the low single digits the whole re-rating case disappears.
• We think the intangible-amortisation adjustment deserves more attention than it gets. $1.39 per share is 84% of the GAAP-to-adjusted bridge and roughly 21% of adjusted earnings. The market pays 22.1x adjusted and 32.5x GAAP for the same company. We use the adjusted basis because consensus does, and we state the alternative so it is visible — because a company that spends $13 billion on acquisitions and then excludes the cost of amortising them is presenting an earnings figure that is real cash but not free of the capital that produced it.
• We note the knowledge base's only thematically adjacent material and it runs against the company. The two case-sensitive free-text survivors both describe China targeting industrial automation as a strategic emerging industry with domestic self-sufficiency in all core technology (dwarkesh, 2025-06-19, conviction 70) and note that Chinese industrial automation is already advanced (dwarkesh, 2025-05-29, conviction 60). Asia, Middle East and Africa is 30.2% of Emerson's revenue. Neither claim names a company and neither is used; both are recorded as the only outside material in the store that touches this business, and both are mildly negative.
• Positive surprise that would force a re-rate: underlying orders above 8% in the November print with Control Systems and Software sustaining high-single-digit growth, which would confirm the software mix shift; or Test and Measurement holding above 15% growth, which would make it a franchise rather than a rebound.
• Negative surprise that would break the thesis: underlying orders below 3%; adjusted segment EBITA margin below 27%; Europe, already down 0.5% in FY2025, deteriorating further; a Middle East escalation, which the chief executive has explicitly named as fluid; or the IEEPA tariff refund proving to be a reversal rather than a windfall.

Synthos fair values

All three anchors are multiples of the FY2027 consensus adjusted EPS distribution (mean $7.196, low $6.934, high $7.357, 18 analysts). The FY2029 row (2 analysts) and FY2030 row (5) are excluded from every conclusion.

• Bear ~$130 — 18.7x the FY2027 consensus LOW of $6.934. Cross-check: 20.0x FY2026E; 5.4% above the 52-week low of $123.30; a 1.69% dividend yield. The scenario: order growth fades back to low single digits, the automation capital cycle turns, Europe keeps shrinking, margin expansion stops at 28%, and the market applies a mid-cycle industrial multiple to a business whose underlying growth is 3.5%. −18.2%.
• Base ~$168 — 23.3x the FY2027 consensus MEAN of $7.196, and exactly the street's median target. Cross-check: 25.8x FY2026E; 21.0x FY2028E; 3.9% above the 52-week high of $161.69; 34.4x guided FY2026 GAAP EPS. The scenario: underlying growth converges toward 5% as orders convert, margin holds near 28.5%, the ~$2.2 billion capital return continues, and the multiple expands modestly on the mix shift toward software. +5.7%.
• Bull ~$205 — 27.9x the FY2027 consensus HIGH of $7.357. Cross-check: 25.6x FY2028E; 26.8% above the 52-week high. The scenario: the software mix shift re-rates the whole company, Control Systems and Software and Test and Measurement compound at double digits, orders sustain 7%+, and the market pays a software-adjacent multiple for an automation franchise. +29.0%.

Base is 5.7% above spot; asymmetry 1.59:1 (18.2% down, 29.0% up), plus a ~2.5% shareholder yield. A base case barely outside the Hold band, a payoff ratio well short of the 2:1 Tactical bar, and the most overbought entry in the batch. Hold.

5. Knowledge base — a textbook homograph collision, and an empty lane

Raw hits: 140. After a case-sensitive entity re-run: 3. Name-level claims on Emerson Electric: ZERO. Used: 0. Discarded: 140.

The sweep ran entity terms EMR, Emerson, Emerson Electric, AspenTech and AZPN, plus free text on Emerson Electric, AspenTech, industrial automation, emerson and automation, across the full distilled claim store.

The single entity-bearing survivor is the collision itself, and it is the cleanest example in this batch:

> 2022-12-15 · neutral · conviction 65 · horizon: thesis · entities: Chan-Zuckerberg Initiative, EMERSON COLLECTIVE · channel: dwarkesh

> "Tech wealth is shifting philanthropy from 501(c)(3) foundations to LLCs and donor-advised funds for flexibility to fund companies, nonprofits, and individuals."

Emerson Collective is the philanthropic limited liability company founded by Laurene Powell Jobs. It has no relationship whatsoever to Emerson Electric Co. A case-insensitive entity sweep on "Emerson" would have imported a claim about philanthropic vehicle structures into an industrial-automation dive at conviction 65 — and, exactly as the CEG / Constellation Software case demonstrated, it would have read as substantive because the claim itself is coherent and well-formed. This is the CEG / PWR / USB pattern and it is reported as one.

The two other case-sensitive survivors are free-text matches on "industrial automation" with EMPTY entity lists, and both are about China:

> 2025-06-19 · bullish · conviction 70 · horizon: thesis · entities: (none) · channel: dwarkesh

> "China's 'strategic emerging industries' target obvious winners — semiconductors, industrial automation, new materials — and it wants domestic self-sufficiency in all core tech including AI."

> 2025-05-29 · bullish · conviction 60 · horizon: fact · entities: China · channel: dwarkesh

> "Data centers being built in China at a very fast clip using existing command structure; industrial automation already advanced."

Note the direction. Both are tagged bullish — bullish on China's industrial policy — and for a Western automation vendor with 30.2% of revenue in Asia, the Middle East and Africa, a claim that China targets industrial automation for domestic self-sufficiency is a mild NEGATIVE. This is a milder version of the stance-tag problem caught on ABNB in this batch: the tag describes the theme, not the implication for any particular company. Neither claim names a company and neither is used in the conviction score; both are recorded because they are the only material in the store that touches this business at all.

The remaining 137 raw hits are noise on the word "automation" across 43 channels, dominated by artificial-intelligence discussion — cognitive_revolution (16), no_priors (10), all_in (8), lex_fridman (8) and thirty-nine others. None names an industrial company.

Conclusion. Breadth 0, claim count 0, net conviction NONE. The lane is EMPTY and is reported as empty rather than padded, consistent with the treatment of CSX, JCI and — in this batch — MRSH and WM. Conviction contributes exactly zero to this verdict.

Recorded alongside the insurance-brokerage and environmental-services findings elsewhere in this batch: the store has essentially no coverage of the diversified industrial sector either. Three of the twelve names in this batch have a genuinely empty lane, and all three are old-economy industrials or financials.

6. Data integrity — what we rejected and why

Seven findings.

1. est.ebitAvg is EXCEEDED BY est.netIncomeAvg in every forward year — arithmetically impossible. REJECTED. $3,657M against $3,581M (FY2026), $3,971M against $3,777M (FY2027), $4,329M against $3,973M (FY2028), $5,170M against $4,267M (FY2029), $5,707M against $4,532M (FY2030). Net income cannot exceed operating income for a company with $387M of interest expense and a 21.2% effective tax rate. Compounded by the fixed-ratio signature: ebitdaAvg is exactly 31.42% of revenueAvg and ebitAvg exactly 19.03% in all five forward years. All forward valuation uses epsAvg, which calibrates well — the FY2026 consensus of $6.506 sits 0.7% below management's own guidance of ~$6.55.

2. A ROUGHLY $6 BILLION TRANSACTION IS INVISIBLE IN cf_a. minorityInterest collapsed from $5,909M (2024-09-30) to $16M (2025-09-30) — the AspenTech buy-in from majority to full ownership — while cf_a reports acquisitionsNet of ZERO for FY2025. The zero is technically correct (purchasing the remaining stake in an already-consolidated subsidiary is a financing transaction, not an acquisition) and it is nonetheless misleading: a reader using cf_a alone would conclude Emerson made no acquisitions in fiscal 2025. The balance-sheet line is the only trace in the payload.

3. A CORPORATE ACTION IS ABSENT: the 364-day credit facility was REPLACED AND REDUCED. From the 8-K of 2026-02-13: a $2 billion 364-day facility entered 2026-02-10, expiring 2027-02-09, replacing a $3 billion facility that expired by its terms. A one-third reduction in committed backup liquidity for a company carrying $4,797M of short-term debt against $1,544M of cash. Never drawn, and the company says it has no intention to draw — but it appears nowhere in the payload.

4. capexToDepreciationTTM of 0.28x is below 1.0 — the corruption signature — and it is EXPLAINED, not corrupt. D&A of $1,518M includes intangible amortisation guided at approximately $1.39 per share, roughly $780 million a year, so real depreciation is nearer $740 million against $431 million of capex — a ratio of about 0.58x, which is low but normal for a company whose depreciation line is dominated by purchase accounting. Free cash flow is computed by subtraction and is correct in all four years. No correction is applied, and the company's own guided FY2026 free cash flow of ~$3.6 billion (a 4.05% yield) is used in preference to the trailing figure.

5. returnOnEquityTTM is ABSENT FROM BOTH km_ttm AND ratios_ttm on this name. On the previous nineteen names in this programme the field appeared in km_ttm and was missing from ratios_ttm; here the km_ttm block is truncated after investedCapitalTTM and the return ratios are missing entirely, so no return-on-equity, return-on-assets or return-on-invested-capital figure is available from the payload at all. This is a new variant of the recurring block asymmetry and it is recorded as such. No return-on-capital figure is published in this dive because none is available and none is estimated.

6. The vendor segment block reports TWO business lines where the company reports FOUR. seg_prod carries Intelligent Devices $12,400M and Software and Control $5,691M, summing to $18,091M against $18,016M of revenue — 100.4%, a clean tie — but the earnings release reports Final Control, Test & Measurement, Control Systems & Software and Intelligent Devices separately, and the growth story is entirely in the two lines the payload does not carry (Test & Measurement +23%, Control Systems & Software +7%). Not a defect; a resolution gap, and it means the software mix shift is invisible to anyone screening on the payload.

7. inc_a FY2023 netIncome of $13,219M against incomeBeforeTax of $2,903M is the Copeland divestiture gain and is not comparable to any other year. Similarly operatingCashFlow of $637M in FY2023 against $2,922M, $3,332M and $3,098M in the surrounding years. Both are correct and both would destroy any multi-year average. No comparison in this dive uses FY2023 net income, EPS or operating cash flow.

seg_geo — CHECKED AND CLEAN. Americas $9,214M + Asia, Middle East & Africa $5,449M + Europe $3,428M = $18,091M against $18,016M, 100.4% — correctly labelled, three genuine regions, no aggregate double-counting. Notable because four of the twelve names in this batch have a broken geography block.

Enterprise value — CHECKED, small residual, ACCEPTED. enterpriseValueTTM of $101,255M against a rebuild of market cap $88,989M + total debt $13,759M − cash $1,544M + minority interest $16M = $101,220M. A 0.03% residual — the tightest reconciliation in this batch. EV/EBITDA of 19.7x is used as reported.

Quote versus technical blocks. quote.yearHigh/yearLow report $165.15 / $122.64; tech.hi52/lo52 report $161.69 / $123.30. Differences of 2.1% and 0.5%. tech is used throughout. tech.max_dd_from_peak (−1.738%) is identical to tech.pct_from_hi.

Non-equity tripwire — checked and passed. Common stock, NYSE-listed, Missouri incorporation, Commission File Number 1-278. Price $158.88; beta 1.235; volume 3.94M shares (~$626M of turnover); 52-week band $123.30-$161.69, a 31% range. This is common equity.

7. Technicals, insiders and verdict

Technicals

• RSI 77.8 — the only reading above 70 in this batch and the most overbought entry in the twelve. MACD +3.52.
• Price $158.88, +11.3% above the 50-day moving average of $142.81 and +13.6% above the 200-day average of $139.85. The largest gap to the 50-day of any name in this batch.
• −1.7% from the 52-week high of $161.69; +28.9% above the low of $123.30. Position in the annual range: 93rd percentile.
• Maximum drawdown from peak: −1.7%, identical to the current distance from the high.
• Relative performance: 3-month +17.3% vs SPY +7.6% and QQQ +7.7% — outperforming by nearly 10 points; 6-month +6.9% vs SPY +11.1%; 12-month +12.1% vs SPY +24.3% and QQQ +30.8%. A year of underperformance reversed hard in the last quarter, with today's +2.6% on the guidance raise completing it.
• Sentiment: 0 strong buy, 22 buy, 16 hold, 3 sell across 41 analysts; vendor consensus label Buy. Consensus target $162.40 — only 2.2% above spot; median $168 (+5.7%); high $185 (+16.4%); low $144 (−9.4%). A consensus target 2.2% above the close on the day of a guidance raise is the market telling you the news is in the price.

Today's move. EMR closed UP 2.60% at $158.88 from $154.85, opening at $156.00 and trading $152.28 to $159.37 on 3.94M shares — closing within 0.3% of the day high. The results 8-K and the 10-Q were both filed 2026-08-04.

The honest read: this is the worst entry in the batch and the best quarter in the batch, and both facts are true at once. Buying at the 93rd percentile of the annual range, 11.3% above the 50-day average, at an RSI of 77.8, on the afternoon of the news, into a consensus target 2.2% away, is a decision made by the calendar rather than by arithmetic.

Insiders — two executive sales, both below today's price

The file contains a mixture of sales, gifts and tax withholdings. The two discretionary transactions are both sales by the two most senior executives.

Surendralal Lanca Karsanbhai — Director, President and Chief Executive Officer — sold 5,700 shares at $142.32 on 2026-03-10, retaining 281,393 (indirect). Ram R. Krishnan — Executive Vice President and Chief Operating Officer — sold 11,500 shares at $141.22 on 2026-06-01, retaining 159,639 (indirect), having earlier made two gifts totalling 6,680 and 53,366 shares on 2026-03-09. Michael H. Train, SVP and Chief Sustainability Officer, had 5,286 shares withheld for tax (F-InKind) at $131.61 on 2026-04-06.

The reading. Both discretionary transactions are sales, both by the top two executives, and both were executed 10-12% BELOW today's close. The amounts are small — approximately $811,000 and $1.62 million — and both retain large positions (281,393 and 159,639 shares), so these are routine diversification rather than a statement. There is not one open-market purchase in the file. The most useful thing about them is the calibration: the chief executive and chief operating officer were content to sell at $142 and $141 five and two months ago, and the stock is now $158.88.

Verdict

Hold.

Struck on the afternoon of a guidance raise, with the share-price reaction as a direct input.

The arithmetic. At $158.88 Emerson trades at 24.4x the fiscal 2026 consensus of $6.506 (against company guidance of ~$6.55) and 22.1x fiscal 2027's $7.196, for consensus growth of 10.6% — and at 32.5x guided fiscal 2026 GAAP earnings of ~$4.89. Our base fair value of $168 is 5.7% above spot, identical to the street's median, with 1.59:1 asymmetry ($130 bear, $205 bull) and a ~2.5% shareholder yield. The street's consensus target of $162.40 implies 2.2%.

What is genuinely excellent, and it is a lot. Underlying orders +7% — the correct leading indicator for a capital-equipment business — underlying sales +6%, pretax margin +270 basis points to 18.8%, adjusted segment EBITA margin +140 basis points to 28.5%, adjusted EPS +13%, free cash flow +36% to $1,323 million, and full-year guidance RAISED to ~$6.55 of adjusted earnings and ~$3.6 billion of free cash flow — a 4.05% yield. Test and Measurement grew 23% and Control Systems and Software accelerated from +3% over nine months to +7% in the quarter, which is the software mix shift appearing in the numbers for the first time. This is the only guidance raise in this batch, and both vendor segment blocks tie, and the enterprise-value reconciliation is the tightest in the twelve.

What keeps it at Hold.

First, the entry. RSI 77.8 — the only reading above 70 in this batch. 11.3% above the 50-day average. 93rd percentile of the annual range. Up 2.6% today and 17.3% in three months. A consensus target 2.2% above the close.

Second, the base case is 5.7% above spot and requires a multiple expansion from 22.1x, which is already at the upper end of the band this business has occupied. If the multiple holds, fair value is spot.

Third, full-year underlying growth is guided at approximately 3.5%, not 6%. The June quarter is the good end of the year; the nine-month business-unit rates are +2% to +4%.

Fourth, roughly 21% of "adjusted earnings" is excluded intangible amortisation of approximately $1.39 per share — 84% of the GAAP-to-adjusted bridge, and permanent. The market pays 22.1x on one basis and 32.5x on the other.

Fifth, the balance sheet has no tangible backing — goodwill and intangibles of $27,651M are 65.9% of assets, tangible book value per share is MINUS $12.10, short-term debt is 3.1x cash, and the backup facility was just reduced from $3 billion to $2 billion.

Sixth, the knowledge base is empty and the only entity match in 140 hits is a philanthropic LLC.

Pre-registered KILL criteria — what would take this to Avoid:

• Underlying orders below 3% in any quarter, after +7%.
• Adjusted segment EBITA margin below 27%, giving back the year's expansion.
• Europe declining further, after −0.5% in FY2025 on a $3,428M base.
• A Middle East escalation materially affecting the Asia, Middle East and Africa region, 30.2% of revenue — a risk the chief executive named in his own quarterly commentary.
• Net debt to EBITDA above 2.75x, or a further reduction in committed backup liquidity below $2 billion.
• A large acquisition, given that goodwill and intangibles already exceed equity by 36%.

Pre-registered UPGRADE conditions — what would take this to Buy — Tactical:

• A price below roughly $140, which is 19.5x FY2027E and restores asymmetry to better than 2.3:1 without requiring any multiple expansion. This is the operative trigger and it is a price — and note that both the chief executive and the chief operating officer sold at approximately that level within the last five months.
• Underlying orders above 8% for two consecutive quarters, which would establish that the automation cycle is turning rather than bouncing.
• Control Systems and Software plus Test and Measurement above 25% of revenue with double-digit growth, which would justify a software-adjacent multiple.
• Adjusted segment EBITA margin above 30%.
• Insider buying, of which there is none.

Where EMR fits in the Synthos Framework Portfolio. No position today; a named limit at roughly $140. This is a high-quality automation franchise with a real and deliberate software mix shift, executing well, that has just told the market so and been paid for it. The disciplined action is to want it and to wait: a 1.5% starter at $140, scaling to 3% on a second consecutive quarter of 8%+ underlying orders. Both the chief executive and the chief operating officer were willing sellers at $141-142 within the last five months; paying $158.88 the afternoon the news broke is the opposite side of that trade. Logged as a tracked Synthos call (Hold) as of 2026-08-04 at $158.88, with the fair-value anchors, kill criteria and the $140 trigger all gradeable.

Single biggest risk: the entry, not the business. There is very little wrong with Emerson. There is very little left in the price. At RSI 77.8, 11.3% above its 50-day average, 1.7% from a 52-week high, at the 93rd percentile of its annual range, on the afternoon of the news, with a consensus target 2.2% above the close and a base fair value 5.7% above it — the asymmetry is 1.59:1 on a business guiding approximately 3.5% underlying growth. The good news has been delivered and paid for. The next piece of information is the November order rate, and it is three months away.

Provenance & disclosures

• Traceability: ZERO knowledge-base claims name Emerson Electric (raw hits 140, case-sensitive survivors 3, entity matches 1 — and it is the wrong Emerson — used 0, discarded 140; breadth 0, claim count 0, net conviction NONE). The lane is reported as EMPTY rather than padded, consistent with the treatment of CSX, JCI and, in this batch, MRSH and WM. THE COLLISION, and it is the cleanest example in this batch: dwarkesh, 2022-12-15, neutral 65, entities Chan-Zuckerberg Initiative and EMERSON COLLECTIVE — the philanthropic limited liability company founded by Laurene Powell Jobs — in a claim that "[t]ech wealth is shifting philanthropy from 501(c)(3) foundations to LLCs and donor-advised funds." A case-INSENSITIVE entity sweep on "Emerson" would have imported a philanthropy-structure claim into an industrial-automation dive at conviction 65, and it would have read as substantive — the CEG / PWR / USB pattern exactly. The two other case-sensitive survivors carry EMPTY entity lists and are free-text matches on "industrial automation", both from dwarkesh and both about CHINA: 2025-06-19 (bullish 70, "China's 'strategic emerging industries' target... semiconductors, industrial automation, new materials — and it wants domestic self-sufficiency in all core tech") and 2025-05-29 (bullish 60, horizon fact, "industrial automation already advanced" in China). Both are tagged bullish on China's industrial policy and are therefore a mild NEGATIVE for a Western automation vendor with 30.2% of revenue in Asia, the Middle East and Africa — a milder instance of the stance-tag problem caught on ABNB in this batch. Neither is used. The remaining 137 raw hits are noise on the word "automation" across 43 channels, dominated by artificial-intelligence discussion. Conviction contributes exactly zero to this verdict. Recorded for the ingest side alongside the identical findings on insurance brokerage and environmental services in this batch: the diversified-industrial sector has essentially no entity coverage in this store.
• Data as-of: fundamentals — the fiscal third quarter ended 2026-06-30, released and filed on the morning of this dive: the 8-K filed 2026-08-04 carries the complete release with segment, guidance and non-GAAP tables preserved, and the 10-Q was filed the same day; annual statements through 2025-09-30 from the 10-K filed 2025-11-10 · estimates 2026-08-04 · prices 2026-08-04, quote timestamp 1785873600 = 2026-08-04T20:00:00Z ($158.88, +2.60%; 50-DMA $142.81; 200-DMA $139.85; RSI 77.8; MACD +3.52) · knowledge-base claims 2026-08-04. Emerson's fiscal year ends 30 September, so FY2026 estimates refer to the year ending 2026-09-30. All figures come from the Synthos vendor data file for EMR or from the SEC filings in the EMR archive; no figure comes from memory, recall or external retrieval.
• Filing archive contents: 10-K filed 2025-11-10 (fiscal 2025); 10-Q filed 2026-05-05 (fiscal Q2, March 2026); 10-Q filed 2026-08-04 (fiscal Q3, June 2026); 8-K filed 2026-02-13 (Items 1.01 and 2.03 — the $2 billion 364-day credit facility of 2026-02-10 replacing a $3 billion facility); 8-K filed 2026-05-05 (fiscal Q2 results); 8-K filed 2026-08-04 (Exhibit 99.1, the complete fiscal third-quarter release with the guidance raise, the business-unit tables and the non-GAAP reconciliations — the primary source for this dive). All six documents carry preserved [TABLE] statement data.
• Where the vendor was REJECTED: est.ebitAvg, which is EXCEEDED by est.netIncomeAvg in every forward year ($3,657M vs $3,581M in FY2026 through $5,707M vs $4,532M in FY2030) — net income cannot exceed operating income for a company paying $387M of interest at a 21.2% tax rate — compounded by the fixed-ratio signature (ebitdaAvg exactly 31.42% of revenueAvg, ebitAvg exactly 19.03%, in all five forward years); all forward valuation uses epsAvg, which calibrates within 0.7% of management's own FY2026 guidance. The FY2029 row (2 analysts) and FY2030 row (5) are excluded from every conclusion. cf_a acquisitionsNet of ZERO for FY2025, which is technically correct but leaves a roughly $6 billion AspenTech buy-in — visible only as minorityInterest collapsing from $5,909M to $16M — invisible to anyone reading the cash flow block. inc_a FY2023 netIncome of $13,219M against pre-tax income of $2,903M (the Copeland divestiture gain) and FY2023 operating cash flow of $637M, both correct and both excluded from every comparison. returnOnEquityTTM, returnOnAssetsTTM and returnOnInvestedCapitalTTM are ABSENT FROM BOTH km_ttm AND ratios_ttm on this name — a new variant of the recurring block asymmetry, in which the km_ttm block is truncated after investedCapitalTTM; no return-on-capital figure is published in this dive because none is available and none is estimated. quote.yearHigh/yearLow ($165.15/$122.64) differ from tech.hi52/lo52 ($161.69/$123.30) by 2.1% and 0.5%; tech is used.
• Where the vendor was CLEAN and it is recorded: seg_prod ties at 100.4% and seg_geo ties at 100.4% with three correctly labelled regions and no aggregate double-counting — notable because four of the twelve names in this batch have a broken geography block. enterpriseValueTTM of $101,255M against a rebuild of $101,220M — a 0.03% residual, the tightest reconciliation in this batch. And capital expenditure and free cash flow: the subtraction is correct in all four years, and the sub-1.0 capexToDepreciationTTM of 0.28x is EXPLAINED — D&A of $1,518M includes roughly $780 million a year of intangible amortisation, so real depreciation is nearer $740 million against $431 million of capex, a ratio of about 0.58x. No correction applied. A resolution gap rather than a defect: the segment block reports two business lines where the release reports four, so the entire growth story (Test & Measurement +23%, Control Systems & Software +7%) is invisible in the payload.
• Corporate action absent from the payload — ONE: the $2 billion 364-day credit facility entered 2026-02-10, expiring 2027-02-09, REPLACING a $3 billion facility that expired by its terms — a one-third reduction in committed backup liquidity for a company carrying $4,797M of short-term debt against $1,544M of cash. Never drawn, and the company states it has no intention to draw.
• Estimate coverage: 16 analysts on FY2026 EPS (a 1.7%-wide range, effectively settled by guidance), 18 on FY2027 — the anchor for all three fair values, with a range of $6.934 to $7.357, a 6.1% spread and among the narrowest in this batch; 7 on FY2028; 2 on FY2029 and 5 on FY2030, both excluded.
• Peer note: the vendor peer set — CMI, CTAS, HWM, ITW, JCI, NOC, PH, TDG, UPS, WM — contains one close comparable (Parker-Hannifin) and two adjacent ones (Illinois Tool Works, Johnson Controls); UPS and Waste Management are in this same research batch and are not automation businesses. The payload carries no peer estimates, so no multiple comparison is computed.
• Fair-value caveat: the $130 / $168 / $205 anchors are multiples of the FY2027 consensus adjusted EPS distribution — 18.7x the low of $6.934, 23.3x the mean of $7.196, and 27.9x the high of $7.357 — cross-checked against FY2026 and FY2028 estimates, against management's own FY2026 guidance and against the 52-week range. Stated arithmetic, not a discounted cash flow. The base case requires an approximately 5.7% multiple expansion from 22.1x to 23.3x, and this is named as unusually fragile because 22.1x is already at the upper end of the band this business has occupied; if the multiple holds, fair value is spot. The base of $168 is identical to the street's median target.
• Basis note, and it is material: consensus estimates and all forward multiples in this dive are on ADJUSTED earnings, which the company defines as excluding "intangibles amortization expense, restructuring and related costs, first year purchase accounting related items and transaction-related costs, discrete taxes and certain gains, losses or impairments." For fiscal 2026 the guided bridge is GAAP ~$4.89 plus intangible amortisation ~$1.39 plus restructuring ~$0.24 plus acquisition fees ~$0.09 plus discrete taxes ~$0.05 less IEEPA tariff refunds ~($0.11) equals adjusted ~$6.55 — a $1.66 adjustment, 34% of GAAP earnings, of which 84% is intangible amortisation that runs for years. On guided GAAP earnings the stock is 32.5x; on guided adjusted earnings 24.3x. Both are published. Note also that the guidance contains a tariff REFUND of approximately $0.11 per share (roughly $62 million) being excluded as a gain, which will not repeat.
• Timing: fiscal third-quarter 2026 results were released on the MORNING of 2026-08-04, the day this dive is struck, beating consensus adjusted EPS by 1.8% ($1.71 against $1.68) with full-year guidance RAISED — and the shares closed UP 2.60% at an RSI of 77.8. The fiscal fourth quarter reports in November; the date is not yet in the vendor calendar. The most recent discretionary insider transactions are a chief-executive sale of 5,700 shares at $142.32 on 2026-03-10 and a chief-operating-officer sale of 11,500 shares at $141.22 on 2026-06-01 — both approximately 10-12% below today's close, and there is no purchase in the file.
• Accessibility note: no information in this dive is conveyed by colour. All emphasis is carried by bold text, table structure and explicit labelling.
• Not investment advice. Independent research, educational and informational only, never personalised. No recommendation to buy, sell or hold any security is made to any person.
• Version: 2026-08-04-full.