EMR › health
EMR · Health
Date: 2026-03-21 Analyst: Fundamentals Analyst Sector: Industrials / Specialty Industrial Machinery (Infrastructure)
Current Market Data
| Metric | Value |
|---|---|
| Current Price | ~$128.15 (as of 2026-03-21) |
| Market Cap | $72.1B |
| 52-Week High | $165.15 |
| 52-Week Low | $90.06 |
| Trailing P/E | 31.4 |
| Forward P/E | 17.9 |
| Dividend Yield | 1.73% |
CRITICAL CONTEXT: EMR's Transformation
EMR's financial statements from FY2022-FY2025 reflect a company mid-transformation. Key events:
- FY2022: Acquired AspenTech (industrial software, ~$6B). Divested InSinkErator to Whirlpool ($3B).
- FY2023: Divested majority stake in Climate Technologies (Copeland) to Blackstone — generated ~$9.8B in net proceeds. This creates massive distortions in FY2023 net income ($13.2B including discontinued ops gain) and cash flows.
- FY2024: Acquired National Instruments (NI) for ~$8.3B. Full year of AspenTech integration.
- FY2025: Post-transformation "clean" year. Announced deal to take AspenTech fully private ($7.2B for remaining minority stake, funded with new debt).
The pre-transformation EMR (FY2020-FY2021) was a diversified industrial conglomerate. The post-transformation EMR (FY2024+) is a focused automation/software company. Direct 5-year comparisons are structurally impaired. I flag this throughout and provide both raw and normalized analysis where possible.
1. Revenue
| Fiscal Year | Revenue ($B) | YoY Growth | Source |
|---|---|---|---|
| FY2020 (Sep) | $16.79 | -8.6% | Web (MacroTrends) |
| FY2021 (Sep) | $18.24 | +8.6% | Web (Emerson PR) |
| FY2022 (Sep) | $13.80 | -24.3% | Yahoo Finance MCP |
| FY2023 (Sep) | $15.17 | +9.9% | Yahoo Finance MCP |
| FY2024 (Sep) | $17.49 | +15.3% | Yahoo Finance MCP |
| FY2025 (Sep) | $18.02 | +3.0% | Yahoo Finance MCP |
Revenue CAGR:
| Period | CAGR | Notes |
|---|---|---|
| 5-Year (FY2020→FY2025) | +1.4% | Structurally misleading — FY2020 included divested businesses |
| 3-Year (FY2022→FY2025) | +9.3% | More representative of "new EMR" trajectory |
| 2-Year (FY2023→FY2025) | +9.0% | Post-NI acquisition run rate |
FLAG: FY2022 revenue dropped sharply because Climate Technologies was reclassified as discontinued operations and removed from continuing revenue. The FY2020-FY2021 revenue ($16.8-18.2B) included businesses that EMR no longer owns. The 3-year CAGR from FY2022 is the most meaningful baseline for the "new EMR."
2. Net Income (Continuing Operations)
| Fiscal Year | Net Income — Cont. Ops ($B) | Net Income — Total ($B) | Notes |
|---|---|---|---|
| FY2020 | ~$1.99 | ~$1.99 | Pre-transformation |
| FY2021 | ~$2.33 | ~$2.33 | Pre-transformation |
| FY2022 | $1.88 | $3.23 | Includes disc. ops gains |
| FY2023 | $2.26 | $13.22 | Copeland divestiture gain ~$10.9B in disc. ops |
| FY2024 | $1.61 | $1.97 | NI integration costs, $231M impairment |
| FY2025 | $2.24 | $2.29 | Clean year |
Net Income CAGR (Continuing Operations):
| Period | CAGR | Notes |
|---|---|---|
| 5-Year (FY2020→FY2025) | +2.4% | Impaired by transformation |
| 3-Year (FY2022→FY2025) | +6.0% | Better baseline |
FLAG: FY2023 total net income of $13.2B is entirely non-recurring (Copeland gain). FY2024 was depressed by NI acquisition/integration charges ($429M unusual items, $231M impairment). FY2025 is the first "clean" post-transformation year.
3. EPS Trajectory
| Fiscal Year | Diluted EPS (Total) | Diluted EPS (Cont. Ops, est.) | Diluted Shares (M) |
|---|---|---|---|
| FY2020 | $3.24 | ~$3.24 | ~607 |
| FY2021 | ~$3.82 | ~$3.82 | ~602 |
| FY2022 | $5.41 | $3.16 | 596.3 |
| FY2023 | $22.88 | $3.92 | 577.3 |
| FY2024 | $3.43 | $2.80 | 574.0 |
| FY2025 | $4.04 | $3.95 | 566.7 |
FLAG: FY2023 EPS of $22.88 is massively inflated by the Copeland divestiture gain. Continuing ops EPS is the relevant metric. FY2024 continuing ops EPS was depressed by NI integration. FY2025 at ~$3.95 continuing ops represents the normalized run rate. Forward consensus implies significant earnings acceleration (forward P/E 17.9 vs trailing 31.4, implying ~$7.15 forward EPS).
4. Free Cash Flow
| Fiscal Year | Operating CF ($B) | CapEx ($M) | FCF ($B) | FCF Margin |
|---|---|---|---|---|
| FY2020 | ~$3.1 (est.) | ~$490 (est.) | ~$2.6 (est.) | ~15.5% |
| FY2021 | ~$3.6 | ~$550 (est.) | ~$3.0 | ~16.4% |
| FY2022 | $2.92 | $299 | $2.62 | 19.0% |
| FY2023 | $0.64 | $363 | $0.27 | 1.8% |
| FY2024 | $3.33 | $419 | $2.91 | 16.7% |
| FY2025 | $3.10 | $431 | $2.67 | 14.8% |
Continuing Operations OCF (more relevant):
| Fiscal Year | Cont. Ops OCF ($B) | CapEx ($M) | Cont. Ops FCF ($B) |
|---|---|---|---|
| FY2022 | $2.05 | $299 | $1.75 |
| FY2023 | $2.71 | $363 | $2.35 |
| FY2024 | $3.32 | $419 | $2.90 |
| FY2025 | $3.68 | $431 | $3.25 |
FCF CAGR (Continuing Operations):
| Period | CAGR | Notes |
|---|---|---|
| 3-Year (FY2022→FY2025) | +22.8% | Strong trajectory on new business |
FLAG: FY2023 total FCF of $274M is distorted by ~$2.1B in discontinued ops cash outflows (Copeland separation costs). The continuing operations FCF of $2.35B is the real number. The 3-year continuing ops FCF CAGR of ~23% is strong and demonstrates the new EMR is generating improving cash flows.
5. FCF Per Share (Adjusted for Buybacks)
| Fiscal Year | FCF ($B) | Diluted Shares (M) | FCF/Share |
|---|---|---|---|
| FY2022 | $2.62 (total) / $1.75 (cont.) | 596.3 | $4.40 / $2.93 |
| FY2023 | $0.27 (total) / $2.35 (cont.) | 577.3 | $0.47 / $4.07 |
| FY2024 | $2.91 (total) | 574.0 | $5.07 |
| FY2025 | $2.67 (total) / $3.25 (cont.) | 566.7 | $4.71 / $5.73 |
| Current (MCP) | — | — | $5.12 |
Note: The MCP-calculated FCF/share of $5.12 uses total FCF ($2.67B) divided by current shares. Using continuing ops FCF ($3.25B), the adjusted FCF/share is ~$5.73.
6. Revenue Per Share
| Fiscal Year | Revenue ($B) | Diluted Shares (M) | Revenue/Share |
|---|---|---|---|
| FY2020 | $16.79 | ~607 | $27.66 |
| FY2021 | $18.24 | ~602 | $30.30 |
| FY2022 | $13.80 | 596.3 | $23.15 |
| FY2023 | $15.17 | 577.3 | $26.27 |
| FY2024 | $17.49 | 574.0 | $30.47 |
| FY2025 | $18.02 | 566.7 | $31.80 |
Revenue/share for the "new EMR" is growing: $23.15 → $31.80 over 3 years = +11.2% CAGR (share count reduction adds ~1.7% annually to per-share growth).
7. Debt-to-Assets
| Fiscal Year | Total Debt ($B) | Total Assets ($B) | Debt/Assets | Net Debt ($B) |
|---|---|---|---|---|
| FY2022 | $10.69 | $35.67 | 30.0% | $8.57 |
| FY2023 | $8.56 | $42.75 | 20.0% | $0.11 |
| FY2024 | $8.36 | $44.25 | 18.9% | $4.10 |
| FY2025 | $13.76 | $41.96 | 32.8% | $11.57 |
FLAG: FY2025 debt jumped sharply — total debt increased from $8.4B to $13.8B. This is driven by the pending AspenTech privatization deal (~$7.2B). Current debt of $4.8B (short-term) suggests near-term refinancing needs. Net debt went from $4.1B to $11.6B in one year. This is the most significant balance sheet concern.
Debt/Assets trend: Was improving (30% → 19%), now reversed to 33%. Interest expense rose from $261M (FY2023) to $387M (FY2025), a 48% increase.
8. Shares Outstanding Trajectory
| Fiscal Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) |
|---|---|---|---|
| FY2020 | ~607 | — | — |
| FY2021 | ~602 | -0.8% | — |
| FY2022 | 596.3 | -0.9% | $500 |
| FY2023 | 577.3 | -3.2% | $2,214 |
| FY2024 | 574.0 | -0.6% | $643 |
| FY2025 | 562.8 | -1.9% | $1,167 |
5-Year buyback rate (FY2020→FY2025): ~607M → 562.8M = -1.5% CAGR (7.3% total reduction)
Total buyback spend FY2022-FY2025: $4.52B
SBC issuance partially offsets buybacks ($125-263M/year in SBC vs. $500-2,214M in buybacks), so net buyback is genuine.
9. Capital Allocation Breakdown (FY2025)
Total FCF (continuing ops): ~$3.25B
| Category | Amount ($M) | % of Cont. Ops FCF | Notes |
|---|---|---|---|
| Dividends | $1,192 | 36.7% | $2.12/share annualized |
| Share Buybacks | $1,167 | 35.9% | Net of SBC issuance: ~$904M (27.8%) |
| CapEx | $431 | 13.3% | Already deducted from FCF |
| Acquisitions (net) | $37 | 1.1% | Minimal in FY2025 (post-NI) |
| Debt Issuance (net) | +$5,241 | — | Net debt issuer in FY2025 (AspenTech deal funding) |
| Other Financing | $7,392 | — | AspenTech minority buyout payments |
Historical Capital Allocation Pattern:
| Year | Dividends | Buybacks | Acquisitions | Debt (Net) |
|---|---|---|---|---|
| FY2022 | $1,223M | $500M | $5,685M | +$3,691M issued |
| FY2023 | $1,198M | $2,214M | $529M | -$3,242M repaid |
| FY2024 | $1,201M | $643M | $8,263M | -$567M repaid |
| FY2025 | $1,192M | $1,167M | $37M | +$5,241M issued |
Pattern: EMR cycles between acquisition years (funded by debt) and deleveraging years (excess FCF to debt paydown + buybacks). FY2022 and FY2024 were major acquisition years. FY2023 was a heavy deleveraging + buyback year (Copeland proceeds). FY2025 saw new debt for AspenTech privatization.
10. Dividend Metrics
| Metric | Value |
|---|---|
| Annual Dividend/Share | $2.22 |
| Current Yield | 1.73% |
| Payout Ratio (Yahoo, earnings-based) | 52.4% |
| FCF Payout Ratio (total FCF) | 44.7% ($1,192M / $2,667M) |
| FCF Payout Ratio (cont. ops FCF) | 36.7% ($1,192M / $3,250M) |
| Consecutive Years of Increases | 68-69 years (Dividend King, confirmed) |
| 5-Year Dividend CAGR | ~1.9% |
| 3-Year Dividend CAGR | ~2.2% |
| 1-Year Dividend Growth | ~5.2% |
Note: Dividend growth has been slow (sub-2% CAGR over 5 years) during the transformation period. Management prioritized M&A and portfolio reshaping over dividend growth. The conservative payout ratio (~37% of cont. ops FCF) provides substantial room for acceleration. Forward EPS guidance of ~$6.40-$6.55 implies significant earnings growth ahead, which could unlock faster dividend growth.
11. Margins
| Fiscal Year | Gross Margin | Operating Margin | Net Margin (Cont. Ops) |
|---|---|---|---|
| FY2022 | 45.7% | 17.1% | 13.6% |
| FY2023 | 49.0% | 18.2% | 14.9% |
| FY2024 | 50.8% | 15.2% | 9.2% |
| FY2025 | 52.8% | 19.6% | 12.4% |
Current (trailing, from company info): - Operating Margin: 24.6% (likely LTM or adjusted) - Profit Margin: 12.7%
KEY TREND: Gross margins have expanded dramatically — from 45.7% to 52.8% over 3 years (+710bps). This reflects the portfolio transformation: divesting lower-margin hardware (Climate Technologies) and adding higher-margin software (AspenTech, NI). This is the single most important structural metric confirming the transformation thesis.
FLAG: FY2024 operating margin dipped to 15.2% due to $429M in unusual items (restructuring, NI integration, $231M impairment). FY2025 at 19.6% is the clean number. The forward P/E of 17.9 vs. trailing 31.4 suggests the market expects significant margin expansion from here.
12. ROIC and ROE
| Metric | Value | Source |
|---|---|---|
| ROIC | ~6.7% (Dec 2025) | GuruFocus |
| ROIC (alt.) | ~9.9% (FY2025) | Finbox |
| ROE | ~11.0% | Computed: $2,238M / $20,282M |
| WACC (estimated) | ~11.9% | GuruFocus |
FLAG: ROIC is below estimated WACC across most sources. This is a significant concern for value creation. However, two mitigating factors: 1. The invested capital base is inflated by ~$27.7B in goodwill/intangibles from acquisitions (AspenTech, NI). Stripping those, the underlying business returns are much higher. 2. NI was acquired in Oct 2023 and is still in early integration. Management guides NI cost synergies of $165M+ that have not fully flowed through. 3. Forward earnings growth (forward P/E 17.9 implies ~$7.15 EPS vs. $4.04 trailing) should improve ROIC significantly.
13. Stock-Based Compensation
| Fiscal Year | SBC ($M) | SBC % of Revenue | SBC % of FCF (total) | SBC % of Cont. Ops FCF |
|---|---|---|---|---|
| FY2022 | $125 | 0.9% | 4.8% | 7.1% |
| FY2023 | $250 | 1.6% | 91.2%* | 10.6% |
| FY2024 | $260 | 1.5% | 8.9% | 7.9% |
| FY2025 | $263 | 1.5% | 9.9% | 8.1% |
*FY2023 total FCF was only $274M due to disc. ops distortion.
SBC is moderate and well-contained at ~1.5% of revenue. Net buybacks significantly exceed SBC issuance ($1,167M buybacks vs. $263M SBC in FY2025), so dilution is not a concern.
14. Gross Margin Trend (Transformation Signal)
| Fiscal Year | Gross Profit ($B) | Revenue ($B) | Gross Margin |
|---|---|---|---|
| FY2022 | $6.31 | $13.80 | 45.7% |
| FY2023 | $7.43 | $15.17 | 49.0% |
| FY2024 | $8.89 | $17.49 | 50.8% |
| FY2025 | $9.52 | $18.02 | 52.8% |
3-Year gross margin expansion: +710bps
This is the clearest quantitative evidence that EMR's transformation from industrial hardware conglomerate to automation/software platform is succeeding. Pre-transformation EMR (diversified industrial) had gross margins in the ~40-42% range. The new EMR at 53% reflects the higher-margin software revenue mix from AspenTech and NI.
15. D&A and Amortization (Acquisition-Related)
| Fiscal Year | Depreciation ($M) | Amortization of Intangibles ($M) | Total D&A ($M) |
|---|---|---|---|
| FY2022 | $312 | $530 | $842 |
| FY2023 | $287 | $764 | $1,051 |
| FY2024 | $323 | $1,366 | $1,689 |
| FY2025 | $344 | $1,174 | $1,518 |
FLAG: Intangible amortization is substantial ($1.17B in FY2025) due to acquired intangibles from AspenTech and NI deals. This depresses GAAP earnings relative to cash earnings. Adjusted EPS (adding back amortization) would be significantly higher than GAAP EPS. This partially explains the gap between trailing P/E (31.4) and forward P/E (17.9) — analysts may use adjusted earnings.
Summary Scorecard
| Metric | Score | Detail |
|---|---|---|
| Revenue Growth (3yr) | Solid | +9.3% CAGR, organic + NI |
| FCF Generation | Strong | $3.25B cont. ops, improving |
| FCF CAGR (3yr cont.) | Strong | +22.8% |
| Gross Margin Trend | Excellent | 45.7% → 52.8% (+710bps in 3 years) |
| Operating Margin | Improving | 19.6% clean, expanding |
| Debt Level | Elevated | Debt/assets 32.8%, net debt $11.6B — AspenTech deal |
| Share Count | Declining | -1.5% CAGR, net buyback program active |
| Dividend Safety | Strong | 37% FCF payout, 69-year streak |
| Dividend Growth | Weak | 1.9% 5-year CAGR, but room to accelerate |
| ROIC | Concern | Below WACC on reported basis; inflated capital base |
| SBC | Moderate | 1.5% of revenue, well offset by buybacks |
| Capital Allocation | Active | Cycles between M&A and deleveraging |
Key Anomalies & Data Gaps
-
FY2020-FY2021 Yahoo Finance MCP returned no data — balance sheet, income statement, and cash flow all show 0 for FY2021. Pre-transformation financials sourced from web searches (Emerson press releases, MacroTrends). 5-year CAGRs use web-sourced data and should be treated as approximate.
-
FY2023 is not comparable to any other year — $10.9B gain from Copeland divestiture inflates total net income/EPS. Always use continuing operations figures.
-
FY2025 debt spike — $13.8B total debt (up from $8.4B) driven by AspenTech privatization funding. $4.8B is short-term debt requiring near-term refinancing or repayment.
-
ROIC calculation challenged — $27.7B in goodwill/intangibles (66% of total assets) from acquisitions inflates invested capital base and depresses reported ROIC. This is structural and will persist for years.
-
Forward earnings gap — Forward P/E of 17.9 vs. trailing 31.4 implies consensus expects ~$7.15 EPS. GAAP trailing EPS is $4.04. The gap is likely explained by: (a) full-year NI synergies, (b) margin expansion, (c) analysts using adjusted EPS excluding amortization. This needs verification.
-
Pre-transformation revenue baseline misleading — FY2020 ($16.8B) and FY2021 ($18.2B) included Climate Technologies, InSinkErator, and other divested segments. The "new EMR" at $18.0B revenue has rebuilt to similar top-line but with fundamentally different (higher-margin) business mix.