EMR
Emerson Electric
Hybrid Industrial
★ Quality 24/100Price today
$152.82
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What this business is made of
The business
Emerson is the nervous system of the refinery: you can't start it up without shutting it down.
Emerson sells industrial automation: software, instruments and control systems that keep refineries, chemical plants and factories running. It charges for equipment and, increasingly, for recurring software via AspenTech and National Instruments. FY2025: $18.0B in sales, 53% gross margin, FCF of $2.7B.
Process control is embedded in plants that run for 30 years; switching providers means halting production and risking safety. That exit friction and installed base generate recurring service revenue. It's not a monopoly: Siemens, ABB and Honeywell fight for the same ground.
Revenue history
From $15.6B to $18.0B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $18.0B · FY2025
Of every $100 in sales, $87 goes to costs and operations; $13 is left as net profit (13% margin).
Catalysts and risks
Integration of AspenTech and NI: target of software/digital above 25% of sales, with margins higher than hardware.
Buybacks and dividend: 68 consecutive years raising the dividend, steady capital returned.
Capex in electrification, LNG and semiconductors through 2027 feeds the automation backlog.
Cyclicality: sales tied to energy and chemical capex; an industrial recession hits directly.
Debt of $8.9B and near-zero cash after the acquisition wave — little cushion if rates rise.
Digesting NI and AspenTech: big integrations destroy value when they go wrong.
Charlie's note
“Paying 19.58x for a business that grows 55% with a 53% gross margin and switching costs embedded in plants that last 30 years is a sensible multiple for a real moat — not perfect but genuine. Patience rewards the one who waits for the moment, not the one who chases the rush.”
Analysis · June 2026
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