Emerson Electric Co EMR

Despite Cyclical Headwinds, We Think Emerson Is Well Positioned to Capture Secular Automation Trends

In our view, Emerson Electric is the undisputed powerhouse in process manufacturing on the west side of the Atlantic. Despite near-term headwinds, we believe the firm is poised for several years of positive organic growth. Its total addressable automation market, both served and unserved, totals over $200 billion, of which approximately 59% is in hardware and services, 32% in control product software, and 9% stand-alone software. Even as Emerson holds either first or second share in a variety of product categories, established firms' share remains somewhat fragmented (depending on the category, Emerson holds roughly midteens market share), suggesting a large runway for growth.