WS Investor
06 May 2026, 09:38
Emerson Stock Slips 0.38% in Premarket as Middle East Conflict Weighs on Sales
May 6, 2026 · Earnings Report
Emerson reported second quarter fiscal 2026 results, posting modest top-line growth and stronger-than-expected margins, though the industrial automation giant flagged ongoing headwinds from the conflict in the Middle East. Shares dipped 0.38% in premarket trading, a muted reaction reflecting a mixed but broadly steady quarter.
Net sales came in at $4.56 billion for the quarter ended March 31, 2026, up 3% from $4.43 billion in the same period a year ago. Underlying sales growth, which strips out currency and portfolio effects, was just 0.5%, reflecting the drag from Middle East operations. Despite the softer top line, pretax earnings climbed to $793 million from $629 million a year ago, pushing pretax margin up 320 basis points to 17.4%.
GAAP earnings per share rose 28% to $1.10, compared to $0.86 in Q2 2025. On an adjusted basis, EPS came in at $1.54, up 4% year-over-year. Adjusted segment EBITA was $1.26 billion, with margin of 27.6%, down slightly by 40 basis points from the prior year period.
"Emerson's second quarter results reflect our ability to deliver in a dynamic environment," said President and CEO Lal Karsanbhai. "While sales were impacted by the conflict in the Middle East, margins exceeded expectations, and we achieved strong adjusted earnings per share. Underlying orders were up 5% as we continue to see resilient demand, led by Software and Systems, with sustained momentum in our growth verticals."
Operating cash flow came in at $779 million, down 6% from $825 million a year ago, with free cash flow of $694 million, also down 6%. Emerson also declared a quarterly cash dividend of $0.555 per share, payable June 10, 2026 to stockholders of record as of May 15, 2026. As part of a broader shift toward returning capital to shareholders, the company plans to return approximately $2.2 billion in 2026 through roughly $1 billion in share repurchases and approximately $1.2 billion in dividends.
Karsanbhai expressed confidence in the remainder of the fiscal year. "As we look ahead, 2026 continues to develop largely as expected with a strong second half, supported by orders momentum and a robust backlog," he said.
For the third quarter of fiscal 2026, Emerson expects net sales growth of approximately 5.5% and underlying sales growth of around 5%, with adjusted EPS in the range of $1.65 to $1.70. For the full fiscal year, the company guided to net sales growth of approximately 4.5% and underlying sales growth of around 3%, with adjusted EPS expected between $6.45 and $6.55. Full year operating cash flow is projected at $4.0 billion to $4.1 billion, with free cash flow of $3.5 billion to $3.6 billion.
May 6, 2026 · Earnings Report
Emerson reported second quarter fiscal 2026 results, posting modest top-line growth and stronger-than-expected margins, though the industrial automation giant flagged ongoing headwinds from the conflict in the Middle East. Shares dipped 0.38% in premarket trading, a muted reaction reflecting a mixed but broadly steady quarter.
Net sales came in at $4.56 billion for the quarter ended March 31, 2026, up 3% from $4.43 billion in the same period a year ago. Underlying sales growth, which strips out currency and portfolio effects, was just 0.5%, reflecting the drag from Middle East operations. Despite the softer top line, pretax earnings climbed to $793 million from $629 million a year ago, pushing pretax margin up 320 basis points to 17.4%.
GAAP earnings per share rose 28% to $1.10, compared to $0.86 in Q2 2025. On an adjusted basis, EPS came in at $1.54, up 4% year-over-year. Adjusted segment EBITA was $1.26 billion, with margin of 27.6%, down slightly by 40 basis points from the prior year period.
"Emerson's second quarter results reflect our ability to deliver in a dynamic environment," said President and CEO Lal Karsanbhai. "While sales were impacted by the conflict in the Middle East, margins exceeded expectations, and we achieved strong adjusted earnings per share. Underlying orders were up 5% as we continue to see resilient demand, led by Software and Systems, with sustained momentum in our growth verticals."
Operating cash flow came in at $779 million, down 6% from $825 million a year ago, with free cash flow of $694 million, also down 6%. Emerson also declared a quarterly cash dividend of $0.555 per share, payable June 10, 2026 to stockholders of record as of May 15, 2026. As part of a broader shift toward returning capital to shareholders, the company plans to return approximately $2.2 billion in 2026 through roughly $1 billion in share repurchases and approximately $1.2 billion in dividends.
Karsanbhai expressed confidence in the remainder of the fiscal year. "As we look ahead, 2026 continues to develop largely as expected with a strong second half, supported by orders momentum and a robust backlog," he said.
For the third quarter of fiscal 2026, Emerson expects net sales growth of approximately 5.5% and underlying sales growth of around 5%, with adjusted EPS in the range of $1.65 to $1.70. For the full fiscal year, the company guided to net sales growth of approximately 4.5% and underlying sales growth of around 3%, with adjusted EPS expected between $6.45 and $6.55. Full year operating cash flow is projected at $4.0 billion to $4.1 billion, with free cash flow of $3.5 billion to $3.6 billion.
