General Electric Company (GE), Honeywell International Inc. (HON) & Emerson Electric Co. (EMR): Are Industrials on the Verge of a New Revolution?

A case for Emerson

Emerson Electric Co. (NYSE:EMR) has managed to increase its net income and revenue growth without substantial debt. Its financial position is solid and sound management can allow the firm to concentrate on the industry of tomorrow. Healthy cash flow from operations allows the company to position itself as a leader in the new industrial revolution.

The company is already a leader in industrial automation, and the firm has identified a demand for technology helping to facilitate machine availability and reliability. This could lead to flexibility in manufacturing and the ability to develop a wider range of products at a fraction of the time it took in previous years. This could also lead to improved efficiency and less waste.

Emerson fundamentals

The solid financial foundation of Emerson Electric Co. (NYSE:EMR) also means the firm will grow in the years ahead. Like Honeywell, Emerson has one of the highest returns on investment than any other company in its sector. At nearly 9%, the profit margin shows this company isn’t likely to be taking on deficits any time soon, and with the firm’s indication that demand will increase, profit will likely roll in as well.

Breaking it all down

Looking at these three companies in a pure valuation perspective, General Electric appears to be the best stock to own. However, the dividends paid by the company over the years haven’t been as consistent as those paid by Honeywell International Inc. (NYSE:HON)and Emerson Electric Co. (NYSE:EMR). Still, I have confidence in GE’s vision. While General Electric Company (NYSE:GE) was hard-hit by the recession, lower debt indicates the company is ready to move ahead.

I believe the long-term prospects for GE are very positive, but I am less certain about the shorter-term potential — so is the market, and that has kept GE’s price attractive. Investors who want to get in on GE now before the company starts building momentum again and the price goes up are taking on short-term risk. But as a long-term investor, the overall potential of the firm outweighs any possible short-term setbacks.

The article Are Industrials on the Verge of a New Revolution? originally appeared on Fool.com and is written by Phillip Woolgar.

Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Emerson Electric Co. (NYSE:EMR). The Motley Fool owns shares of General Electric Company (NYSE:GE). Phillip is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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