Dividend Aristocrats Part 29: Emerson Electric Co. (EMR)

Recession Performance

Emerson Electric was profitable throughout the Great Recession of 2007 to 2009.  The company’s earnings are closely tied to global capital investment spending and GDP growth.

As a result, the company saw earnings-per-share decline substantially through the Great Recession.

Emerson Electric did not hit new earnings-per-share highs until 2011; the company took about 2 years to recover from the worst of the recession.

Emerson Electric’s earnings-per-share are shown below during the Great Recession and subsequent recovery:

-2007 Earnings-per-share of $2.66

-2008 Earnings-per-share of $3.11 (new high)

-2009 Earnings-per-share of $2.27 (recession low)

-2010 Earnings-per-share of $2.60

-2011 Earnings-per-share of $3.24 (full recovery, new EPS high)

Final Thoughts & Recommendations

There is much to like about Emerson Electric stock:

-Price-to-earnings ratio of 15.8

-Profitability during recessions

-Shareholder friendly management

-59 years of consecutive dividend increases

-Expected total returns of 11.8% to 13.8% a year

All of these factors help Emerson Electric Co. (NYSE:EMR) to rank highly using The 8 Rules of Dividend Investing.

Previously discussed short-term headwinds have driven down Emerson Electric’s stock price.  The company has a very reasonable price-to-earnings ratio as a result.  I believe Emerson Electric to be undervalued at current prices.

Much of the manufacturing industry is undervalued at current prices.

Emerson Electric is a buy at current prices.  Fortunately for investors, there are several other manufacturers (in slightly different manufacturing segments) that make more compelling investments at his time.

The 3 highest ranked manufacturers (publicly traded in the United States) using the Sure Dividend system currently are:

–Deere & Company (DE)

–Cummins (CMI)

–Eaton (ETN)

In addition, Pentair (PNR) has a compelling growth story.

Disclosure: None