As of June 9, 2025, Emerson Electric Co's estimated intrinsic value ranges from $52.33 to $126.84 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $126.84 | +2.7% |
| Discounted Cash Flow (5Y) | $94.48 | -23.5% |
| Dividend Discount Model (Multi-Stage) | $89.53 | -27.5% |
| Dividend Discount Model (Stable) | $92.32 | -25.3% |
| Earnings Power Value | $52.33 | -57.6% |
Is Emerson Electric Co (EMR) undervalued or overvalued?
With the current market price at $123.51, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Emerson Electric Co's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.82 | 1.03 |
| Cost of equity | 7.6% | 10.6% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 20.4% | 20.7% |
| Debt/Equity ratio | 0.11 | 0.11 |
| After-tax WACC | 7.2% | 9.9% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $94 | $65,624M | 83.0% |
| 10-Year Growth | $127 | $83,823M | 69.6% |
| 5-Year EBITDA | $98 | $67,710M | 83.5% |
| 10-Year EBITDA | $130 | $85,758M | 70.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $3,495M |
| Discount Rate (WACC) | 9.9% - 7.2% |
| Enterprise Value | $35,197M - $48,621M |
| Net Debt | $12,476M |
| Equity Value | $22,721M - $36,145M |
| Outstanding Shares | 562M |
| Fair Value | $40 - $64 |
| Selected Fair Value | $52.33 |
| Metric | Value |
|---|---|
| Market Capitalization | $69474M |
| Enterprise Value | $81950M |
| Trailing P/E | 29.01 |
| Forward P/E | 35.21 |
| Trailing EV/EBITDA | 15.80 |
| Current Dividend Yield | 172.58% |
| Dividend Growth Rate (5Y) | -0.17% |
| Debt-to-Equity Ratio | 0.11 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $38.05 |
| Discounted Cash Flow (5Y) | 25% | $23.62 |
| Dividend Discount Model (Multi-Stage) | 20% | $17.91 |
| Dividend Discount Model (Stable) | 15% | $13.85 |
| Earnings Power Value | 10% | $5.23 |
| Weighted Average | 100% | $98.66 |
Based on our comprehensive valuation analysis, Emerson Electric Co's weighted average intrinsic value is $98.66, which is approximately 20.1% below the current market price of $123.51.
Key investment considerations:
Given these factors, we believe Emerson Electric Co is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.