Emerson's a Good Earner
Emerson Electric reported a stellar quarter last Tuesday, May 6, beating earnings per share estimates by 4 cents. Management immediately raised 2008 guidance. The good news pushed the stock up to $56, but that doesn’t seem to be enough for Cramer. During Monday’s Mad Money, he said Emerson deserves to trade at $60.
Emerson is one of those “new tech” companies, like Eaton, Dover and Parker Hannifin, Cramer’s been talking about lately. Instead of being wowed by gadgets like Research in Motion’s new Bold smartphone, he’s more impressed with inventions that fuel the strong global economy. Emerson plays its part by boosting efficiency in everything from telco networks to nuts-and-bolts manufacturing.
Why’s Cramer so bullish on EMR? Three of the company’s most “new tech” divisions were up anywhere from 15% to over 20% for the quarter. Then there’s the fact that Emerson gets more than half its sales from outside the U.S. And the $2.4 billion in free cash flow expected this year should go toward buybacks and dividends. All that and the stock’s cheap, too.
If Emerson can produce these kinds of numbers during a tough economy, imagine what the company’s capable of during good times. And those good times will come, Cramer said. So maybe it’s a good idea to buy some EMR while it’s still trading at a discount.
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