Management reported their 30.Sept results this morning. They were in line with Gudovac's expectations from last July and August. Gudovac believes EMR is a well run mature enterprise that will return approximately 6 5/8% to Owners of common when bought at $34. Management is restructuring the Enterprise to be nicely profitable with 20-25% lower revenues. The operating story for Emerson is quite simple - solid.
The Board of Directors felt confident enough to increase the dividend by 1.5% Yet, even with the growth in dividends the payout ratio dropped slightly to 50%.
At $34, Owners would be paying around 1.9x Owners Book Value which is a premium to Gudovac's usual book target of close to 1.0x. However, Emerson should be looked at as a steady dividend payer compared to a Debt instrument. In some ways, Emerson's dividend might be considered less risky than US Treasuries which are subject to inflation - devaluation risks. In a inflationary-devaluation environment, Emerson's dividends should come close to growing near the rate of US dollar inflation or devaluation. Nearly all of Emerson's expected revenue growth comes from customers outside the USA.
In sum, not much excitement in today's results. Emerson is a great dividend stock whose Managers have the situation well under control. Owners would do well to examine Gudovac's August 20th report referenced in the first paragraph.
---------------------
Don't Get Massacred !
Gudovac1941@gmail.com
No comments:
Post a Comment