Key Takeaways

• Shares of industrial technology and engineering company Emerson Electric popped higher Tuesday.

• The company reported better-than-expected quarterly sales and profit boosted by its Intelligent Devices segment.

• Emerson also announced plans to acquire the remaining stake in industrial software firm AspenTech.

Emerson Electric (EMR) shares surged 7% on Tuesday, securing one of the top performances in the S&P 500, after the provider of automation equipment, industrial software, and engineering products reported strong sales and profit for its fiscal fourth quarter.

Emerson also announced a proposal to buy the remaining stake of industrial software company Aspen Technology (AZPN), reflecting Emerson's strategic focus on the industrial automation market.

Earnings Highlights

Emerson's net sales for the recently completed quarter came in at roughly $4.6 billion, up roughly 13% year-over-year. Earnings per share (EPS) of $1.48 for the fiscal fourth quarter grew 15% from the year-ago period.

Both figures exceeded analysts' consensus forecasts. Growth in the Intelligent Devices and Software and Control segments helped drive the strong performance.

Emerson's chief executive officer (CEO) touted the successful integration of the company's test and measurement systems assets, highlighting $100 million in synergies over the first year. The company enhanced this part of its business through the October 2023 acquisition of software-connected test and measurement firm National Instruments.

AspenTech Buyout Proposal

In 2021, Emerson merged its software units with competitor AspenTech and acquired a 55% position in the combined entity. The new proposal to buy out the remaining stake values AspenTech at a total of $15.1 billion, meaning the prospective transaction would cost Emerson just more than $6.5 billion.

CFRA Research analysts reportedly said they were unsurprised by Emerson's desire to gain full control of AspenTech. In the wake of the pandemic and numerous high-profile labor disputes, manufacturers are likely to maintain their focus on automation, the analysts noted.

Following Tuesday's gains, Emerson stock is trading more than 20% higher year-to-date.