Why Did Emerson Electric Beat Analysts’ Fiscal 1Q17 Estimates?
Emerson Electric’s consolidated revenue
For fiscal 1Q17, Emerson Electric (EMR) reported consolidated sales of $3.22 billion compared to analysts’ expectations of $3.17 billion. The deviation from analysts’ expectations was primarily due to strong operating performance of the company’s Commercial & Residential Solutions segment in Asian and US markets.
According to the company’s filings, strong demand in global air conditioning, refrigeration, and HVAC1 markets led to a 7% increase in sales from its Commercial & Residential Solutions segment on a year-over-year basis.
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Emerson Electric reported its EBIT2 margin of the Automation Solutions segment at 16.6% for fiscal 1Q17 compared to 15.8% in fiscal 1Q16. The EBIT margin of the company’s Commercial & Residential Solutions segment rose 140 basis points to 19.9%.
According to the company’s filings, the improvement in EBIT margins was primarily due to savings from its restructuring initiatives and volume leverage, accompanied by benefits of platform leverage. For fiscal 1Q17, EMR’s overall EBIT margins came in at 15.8%, compared to 14.4% in fiscal 1Q16.
Higher-than-anticipated sales, cost savings from restructuring initiatives, lower corporate and other expenses due to favorable comparisons on stock compensation of $26 million, and income tax benefits helped Emerson Electric beat analysts’ earnings estimates in fiscal 1Q17.
Emerson Electric’s operating cash flows from its continuing operations came in at $410 million, up nearly 6% on a year-over-year basis. EMR expects its 2017 cash flows to be ~$2.5 billion, which is flat when compared to 2016.
In the final part of this series, we’ll look at Emerson Electric’s revised fiscal 2017 guidance.