Analyst Note| Joshua Aguilar |
Nothing in wide-moat-rated Emerson’s fiscal fourth-quarter and full-year 2021 results materially alters our long-term view of the firm. While we brought down our long-term revenue assumptions, this was more than offset by higher earnings assumptions. Therefore, we lift our fair value estimate to $107 from $102, just shy of a 5% raise. The raise was primarily driven by a slightly higher GAAP operating margin of 19.4%, including charges (some of which are noncash purchase amortization charges, while others are cash charges, like restructuring). That’s 90 basis-points higher than our prior expectations as we incorporate an additional year of assumptions. Time value of money was also a slight tailwind.