Emerson Electric’s Outlook Was a ‘Proper Disappointment.’ The Stock Drops.

Emerson Electric provides industrial automation solutions. (Sara Stathas/Bloomberg)

Key Points

• Emerson Electric’s fiscal fourth-quarter earnings matched expectations, but fiscal year 2026 guidance fell below Wall Street projections.
• Emerson’s shares dropped 3.9% due to disappointing guidance, particularly in control systems and software.
• The manufacturing sector continues to face challenges. The Purchasing Managers Index came in at 48.7 for October, indicating a contraction.

Investors just got a look into the manufacturing economy for 2026. The view isn’t great.

Industrial automation solutions provider Emerson Electric reported fiscal fourth-quarter earnings that were in line with expectations. Management’s financial guidance was an issue for investors.

For the September quarter, Emerson posted adjusted earnings per share of $1.62, up from $1.48 a year earlier and matching Wall Street estimates. Sales were $4.85 billion, up 4% year over year on a comparable basis, and a hair under Wall Street estimates.

Guidance, however, came in light. For the fiscal year 2026, Emerson management expects total sales growth of about 5.5%, implying revenue of about $19 billion, just under Wall Street projections. Adjusted earnings are expected to land between $6.35 and $6.55 a share. Wall Street currently projects $6.61 a share.

For the fiscal first quarter, earnings per share are expected to be $1.40, up two cents from the first quarter of 2025, and below the Wall Street estimate of $1.54.

The results keep investors waiting for a broad-based industrial recovery, which has eluded them for years.

Emerson shares fell 3.9% on Wednesday to $132.41, while the S&P 500 and Dow Jones Industrial Average rose 0.4% and 0.5%, respectively. Coming into Wednesday trading, Emerson’s stock was up 11% year to date.

“Proper disappointment,” wrote Oxcap analyst Ben Uglow. “The disappointing guidance is driven by control systems and software being low-single-digits down in first-half 2026.”

The North American business was fine, but China and Europe were weak. Uglow was looking for a better outcome. He rates Emerson shares Overweight.

One bright spot was orders, up 6% year over year, better than sales. The problem right now is that order growth hasn’t yet translated into sales growth.

Another saving grace for investors could be conservative guidance. At the end of fiscal 2024, Emerson told investors to expect per-share earnings of about $5.95, but it ultimately reported fiscal 2025 earnings of $6 a share. The company tends to be conservative in its forecasts.

Emerson’s latest report is the latest signal that things are still tough for manufacturers.

The Institute for Supply Management’s Purchasing Managers’ Index, a metric investors look at to gauge the health of the manufacturing economy, came in at 48.7 for October. A reading above 50 indicates growth. The October reading is the eighth consecutive reading below that level.

There is hope that lower interest rates and stable tariff policies could help spur growth for the sector. That just hasn’t happened yet.

Write to Al Root at allen.root@dowjones.com