Emerson Electric Company EMR recently announced that its unit, Vilter Manufacturing has engineered a new suite of products that are likely to be launched in the spring. Vilter’s new suite of products comes up with low global warming potential (GWP) and helps in reduction of ammonia, thus offering a sustainable and safe cold chain.
Notably, the company’s new suite of products incorporates the use of ammonia CO2 cascade system and enables its customers to reduce operating costs. The products under the new suite include a modular refrigeration unit (MRU), a MicroVission controller, 550 reciprocating compressor and a 143-millimeter single screw compressor.
Our Take
Emerson remains optimistic about the prospects of its Commercial & Residential Solutions segment as it is witnessing improving trends in the United States, Europe and Asian construction markets. Thriving Heating Ventilation and Air-Conditioning (HVAC), refrigeration markets and construction-related demand in key end markets is expected to boost segmental growth. For instance, the company expects the segment to grow 5% in fiscal 2018. For the company’s Automation Solutions segment, favorable trends in petrochemical, power and life sciences and improving MRO demand is anticipated to drive its performance.
In the past three months, this Zacks Rank #3 (Hold) company has returned 1.8% against the industry’s decline of 0.7%.
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Meanwhile, the company continues to launch products and technologies to gain a competitive advantage over peers. Especially, the company’s operating arm, Emerson Process Management proactively introduces products to broaden its customer base and gain market traction. This apart, Emerson has a solid history of clinching lucrative contracts in the energy infrastructure that proves to be conducive to its top-line performance. We expect such lucrative contract wins to remain a key growth driver, going ahead.
However, prolonged softness in the oil and gas markets has affected capital and operational spending of clients, thereby hurting the company’s order rates in power generating alternators and electrical distribution businesses. Also, the issue of oversupply may continue to impact prices and spending levels in the oil and gas sector, thereby adding to the challenges.
Key Picks
Some better-ranked stocks from the same space are Regal Beloit Corporation RBC, Franklin Electric Co., Inc. FELE and Enersys ENS. While Regal Beloit sports a Zacks Rank #1 (Strong Buy), Franklin Electric and Enersys carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Regal Beloit exceeded estimates twice in the trailing four quarters, with an average positive earnings surprise of 1.6%.
Franklin Electric outpaced estimates thrice in the preceding four quarters, with an average positive earnings surprise of 5.3%.
Enersys surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 2.6%.
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