The stock fell about 1 percent today, its second straight down day, but it remains near the high it hit last week. We think this is just a quiet day of ordinary movement after a big run-up earlier this month.
Our view
The company is successfully trading lower-margin hardware for high-margin industrial software, and the latest jump in orders shows that plan is working. If you already own it, there is nothing to do here but sit tight and let the transformation play out.
Emerson acquires Glue Inc. to add AI to its testing software
Emerson acquired Glue Inc., a firm that makes software used to automate and plan complex equipment testing. The deal centers on Glue Studio, a tool that uses artificial intelligence to help engineers design tests for new products more quickly.
This is a small but strategic addition to the National Instruments business Emerson bought last year. It helps the company move further away from basic hardware and toward specialized software that customers rely on to get products to market. For long-term owners, this is another step in lifting the company's overall profit margins by selling more high-value digital tools.
BP selects Emerson to automate offshore gas project
Emerson won a contract to provide the digital brains for BP's Shah Deniz compression project. The company will install integrated control and safety systems that handle everything from fire detection to power management. This setup allows the offshore platform to run without a crew on board. This deal fits into the company's focus on high-margin automation software. By helping energy giants run complex sites remotely, Emerson secures long-term service relationships that are more predictable than selling one-off pieces of hardware.
Orders for German-made goods jumped in June as businesses bought equipment to get ahead of potential supply chain delays. This is a helpful sign for the company because Germany is a major hub for industrial manufacturing and a key market for automation technology.
While the cost of parts and energy has risen, the fact that factories are still placing orders shows they are prioritizing upgrades to keep their operations running. This supports the company's focus on selling the software and tools that help these large plants run more efficiently.
RBC Capital raised its target from $169 to $179 while keeping its outperform rating. This move reflects confidence in the company's ability to grow its profits as it shifts more of its business toward high-margin industrial software.
Rudy Sengupta, who currently leads the company's test and analytics software division, will become the Senior Vice President and Chief Technology and AI Officer on August 15. He replaces Peter Zornio, who is retiring after 20 years at the company.
This leadership change is important because the company is betting its future on software and artificial intelligence. Sengupta's background in the National Instruments business, a major recent acquisition, suggests he will focus on weaving AI more deeply into the company's existing automation tools to help customers analyze their factory data more effectively.
Analysts have recently raised their price targets following the company's strong quarterly earnings report. Most analysts, 23 of 41, rate the stock a buy, and the average target of $167 suggests a modest 3% gain from today's price.
Average target$167.13+3%vs $161.69 today
Avg price
Low $144High $186
Buy41 analysts
3Bearish
15Neutral
23Bullish
FirmRatingPrice TargetDate
Bernstein
Outperform
$169→$186
8/14/2026
BMO Capital
—
$150→$175
8/7/2026
Robert W. Baird
Neutral
$160→$171
8/5/2026
RBC Capital
Outperform
$169→$179
8/5/2026
Bernstein
Outperform
$169
7/20/2026
KeyBanc
Overweight
$185→$170
7/13/2026
Wolfe Research
—
$171→$167
7/9/2026
D.A. Davidson
Neutral
$145
6/15/2026
Bernstein
Outperform
$175
6/9/2026
RBC Capital
Outperform
$161→$169
5/6/2026
Barclays
Equal Weight
$140→$144
5/6/2026
BMO Capital
Market Perform
$150
3/26/2026
Emerson Electric earnings
Management has cleared the bar eight quarters in a row. This suggests a very predictable business and a team that knows how to set and hit realistic targets.
Earnings history
EstimateBeatMiss
Emerson Electric past earnings results
Expected
Actual
Surprise
EPS
$1.68
$1.71
+1.8%
Revenue
$4.80B
$4.87B
+1.4%
Key highlights
Full year outlook raised: Management increased the full year forecast and now expects adjusted earnings of $6.55 per share, reflecting healthy demand for automation. The company also plans to return $2.2 billion to shareholders this year through a mix of dividends and $1 billion in stock repurchases.
Profit margins expanding: Gross margin, which is the profit left after paying for the direct costs of making products, rose to 54.5% compared to 52.6% a year ago. This brings the company closer to its goal of 55% as it sells a more profitable mix of software and high tech tools.
Software sales accelerating: The software and systems division grew sales 11% to $1.64 billion, led by a 23% jump in the test and measurement business. This growth is vital for long term owners because these divisions generate profit margins of 31.8%, which is significantly higher than the company average.
Future orders rising: Underlying orders, which measure the value of new business booked this quarter excluding currency swings and acquisitions, grew 7%. This pace is faster than the 5% growth the company saw for the full 2025 fiscal year and shows that industrial customers are still spending on factory upgrades.
Cash generation surge: Free cash flow rose 36% to $1.32 billion, which is the actual cash left over after the company pays for its operations and equipment. The company turned 137% of its adjusted earnings into cash this quarter, which is well above its target of 90% and provides more fuel for dividends.
Our take: This was a strong quarter that proves the pivot to high margin software is working. Raising the full year earnings outlook to $6.55 per share shows management is confident in steady demand for automation. These results strengthen the long term case for a business that is becoming more profitable and better at generating cash.
Emerson Electric’s next earnings date
Q4 2026
NOV
4
Expectation
EPS
$1.83
Revenue
$5.10B
Metrics we are tracking
Metric
Expectations
Status
Gross Margin
Staying above 52% and trending toward 55%
54.5% in Q3 2026
Underlying Sales Growth
Sustaining 4% to 7% organic growth annually
6% YoY in Q3 2026
Software Revenue Mix
Increasing as a percentage of total company sales
33.7% of sales in Q3 2026
Free Cash Flow Conversion
Converting at least 90% of adjusted earnings into cash
137% of adj. earnings in Q3 2026
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