Emerson Electric (NYSE: EMR) and Rockwell Automation (NYSE:ROK) are both large-cap industrials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, profitability, institutional ownership and earnings.

Insider and Institutional Ownership

69.2% of Emerson Electric shares are owned by institutional investors. Comparatively, 72.8% of Rockwell Automation shares are owned by institutional investors. 0.8% of Emerson Electric shares are owned by company insiders. Comparatively, 1.3% of Rockwell Automation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Emerson Electric pays an annual dividend of $1.94 per share and has a dividend yield of 2.6%. Rockwell Automation pays an annual dividend of $3.34 per share and has a dividend yield of 1.6%. Emerson Electric pays out 75.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Rockwell Automation pays out 52.6% of its earnings in the form of a dividend. Emerson Electric has raised its dividend for 8 consecutive years and Rockwell Automation has raised its dividend for 61 consecutive years.

Profitability

This table compares Emerson Electric and Rockwell Automation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emerson Electric 9.94% 20.47% 9.05%
Rockwell Automation 13.08% 38.67% 12.32%

Valuation and Earnings

This table compares Emerson Electric and Rockwell Automation’s 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 3.09 $1.52 billion $2.56 28.86
Rockwell Automation $6.31 billion 4.19 $825.70 million $6.35 32.46

Emerson Electric has higher revenue and earnings than Rockwell Automation. Emerson Electric is trading at a lower price-to-earnings ratio than Rockwell Automation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for Emerson Electric and Rockwell Automation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emerson Electric 2 8 5 0 2.20
Rockwell Automation 1 10 3 0 2.14

Emerson Electric currently has a consensus price target of $66.92, indicating a potential downside of 9.43%. Rockwell Automation has a consensus price target of $170.25, indicating a potential downside of 17.41%. Given Emerson Electric’s stronger consensus rating and higher possible upside, analysts clearly believe Emerson Electric is more favorable than Rockwell Automation.

Volatility & Risk

Emerson Electric has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500. Comparatively, Rockwell Automation has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500.

Summary

Rockwell Automation beats Emerson Electric on 10 of the 17 factors compared between the two stocks.

Emerson Electric Company Profile

Emerson Electric Co. is a diversified global manufacturing company, which provides solutions to customers by bringing technology and engineering together in the industrial, commercial and consumer markets around the world. The Company operates through four segments based on the nature of the products and services rendered: Process Management, Industrial Automation, Climate Technologies and Commercial & Residential Solutions. The Company’s principal production operations are electronics assembly, metal stamping, forming, casting, machining, welding, plating, heat treating, painting and assembly. In addition, the Company uses specialized production operations, including automatic and semiautomatic testing, automated material handling and storage, ferrous and nonferrous machining, and special furnaces for heat treating and foundry applications. The Company provides measurement, control and diagnostic technologies for automated industrial processes.

Rockwell Automation Company Profile

Rockwell Automation, Inc. (Rockwell Automation) is a provider of industrial automation power, control and information solutions for manufacturers. The Company operates through two segments: Architecture & Software and Control Products & Solutions. The Architecture & Software segment contains various hardware, software and communication components of the Company’s integrated control and information architecture capable of controlling the customer’s industrial processes and connecting with their manufacturing enterprise. Architecture & Software has a portfolio of products, including Control platforms that perform multiple control disciplines and monitoring of applications, including discrete, batch and continuous process, drives control, motion control and machine safety control. The Control Products & Solutions segment portfolio includes low and medium voltage electro-mechanical and electronic motor starters, signaling devices, termination and protection devices, relays and timers.

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