Emerson Electric (EMR) and General Electric (GE) Critical Review
Emerson Electric (NYSE: EMR) and General Electric (NYSE:GE) are both large-cap industrial products companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.
This table compares Emerson Electric and General Electric’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent recommendations for Emerson Electric and General Electric, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Emerson Electric currently has a consensus price target of $70.62, suggesting a potential upside of 0.60%. General Electric has a consensus price target of $17.59, suggesting a potential upside of 21.00%. Given General Electric’s higher possible upside, analysts clearly believe General Electric is more favorable than Emerson Electric.
Institutional and Insider Ownership
70.0% of Emerson Electric shares are held by institutional investors. Comparatively, 56.2% of General Electric shares are held by institutional investors. 0.8% of Emerson Electric shares are held by insiders. Comparatively, 1.1% of General Electric shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Emerson Electric pays an annual dividend of $1.94 per share and has a dividend yield of 2.8%. General Electric pays an annual dividend of $0.48 per share and has a dividend yield of 3.3%. Emerson Electric pays out 73.5% of its earnings in the form of a dividend. General Electric pays out 45.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Emerson Electric has increased its dividend for 61 consecutive years. General Electric is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation & Earnings
This table compares Emerson Electric and General Electric’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Emerson Electric||$15.26 billion||2.92||$1.52 billion||$2.64||26.59|
|General Electric||$122.09 billion||1.03||-$5.79 billion||$1.05||13.85|
Emerson Electric has higher earnings, but lower revenue than General Electric. General Electric is trading at a lower price-to-earnings ratio than Emerson Electric, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Emerson Electric has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, General Electric has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.
Emerson Electric beats General Electric on 12 of the 17 factors compared between the two stocks.
Emerson Electric Company Profile
Emerson Electric Co., a technology and engineering company, provides various solutions to industrial, commercial, and residential markets worldwide. The company's Automation Solutions segment offers software; measurement and analytical instrumentation; valves, actuators, and regulators; industry services and solutions; process control systems and solutions; and digital plant solutions. This segment serves oil and gas, refining, chemicals, power generation, pharmaceuticals, food and beverages, automotive, pulp and paper, metal and mining, and municipal water supplies markets. Its Commercial & Residential Solutions segment provides services for climate control industry, such as residential heating and cooling, commercial air conditioning, and commercial and industrial refrigeration. This segment supplies compressors; thermostats; monitoring equipment and electronic controls for gas and electric heating systems; gas valves for furnaces and water heaters; ignition systems for furnaces; sensors and thermistors for home appliances; and temperature sensors and controls. It also offers reciprocating, scroll and screw compressors; precision flow controls; system diagnostics and controls that provide precise temperature management; and environmental control systems. This segment also provides tools for professionals and homeowners; and appliance solutions. The company was formerly known as The Emerson Electric Manufacturing Company and changed its name to Emerson Electric Co. in 2000. Emerson Electric Co. was founded in 1890 and is headquartered in St. Louis, Missouri.
General Electric Company Profile
General Electric Company operates as a digital industrial company worldwide. It operates through Power, Renewable Energy, Oil & Gas, Aviation, Healthcare, Transportation, Lighting, and Capital segments. The Power segment offers technologies, solutions, and services related to energy production, including gas and steam turbines, engines, generators, and high voltage equipment; and power generation services and digital solutions. The Renewable Energy segment provides wind turbine platforms, and hardware and software; offshore wind turbines; solutions, products, and services to hydropower industry; and blades for onshore and offshore wind turbines. The Oil & Gas segment offers oilfield services, oilfield equipment, turbomachinery and process solutions, and digital solutions. The Aviation segment provides jet engines and turboprops; maintenance, component repair, and overhaul services, as well as replacement parts; and additive machines, materials, and engineering services. The Healthcare segment offers diagnostic imaging and clinical systems; products, services, and manufacturing solutions for drug discovery, the biopharmaceutical industry, and cellular and gene therapy technologies; and medical technologies, software, analytics, cloud solutions, and implementation and services. The Transportation segment provides freight and passenger locomotives, and rail and support advisory services; parts, integrated software solutions, and data analytics; software-enabled solutions; mining equipment and services; and marine diesel and stationary power diesel engines and motors, as well as overhaul, repair and upgrade, and wreck repair services. The Lighting segment offers light emitting diode products; and energy efficiency and productivity solutions. The Capital segment provides industrial and energy financial services; and commercial aircraft leasing, financing, and consulting services. General Electric Company was founded in 1892 and is headquartered in Boston, Massachusetts.
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