Critical Survey: Emerson Electric (EMR) & Philips (PHG)
Emerson Electric (NYSE: EMR) and Philips (NYSE:PHG) are both large-cap industrial products companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.
Earnings & Valuation
This table compares Emerson Electric and Philips’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Emerson Electric||$15.26 billion||2.91||$1.52 billion||$2.64||26.48|
|Philips||$20.08 billion||1.95||$1.87 billion||$1.24||34.15|
This table compares Emerson Electric and Philips’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
69.9% of Emerson Electric shares are owned by institutional investors. Comparatively, 6.8% of Philips shares are owned by institutional investors. 0.8% of Emerson Electric shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Emerson Electric pays an annual dividend of $1.94 per share and has a dividend yield of 2.8%. Philips pays an annual dividend of $0.73 per share and has a dividend yield of 1.7%. Emerson Electric pays out 73.5% of its earnings in the form of a dividend. Philips pays out 58.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Emerson Electric has increased its dividend for 61 consecutive years. Emerson Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of recent recommendations for Emerson Electric and Philips, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Emerson Electric presently has a consensus price target of $70.62, indicating a potential upside of 1.03%. Philips has a consensus price target of $37.00, indicating a potential downside of 12.61%. Given Emerson Electric’s higher probable upside, equities analysts clearly believe Emerson Electric is more favorable than Philips.
Risk and Volatility
Emerson Electric has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500. Comparatively, Philips has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500.
Emerson Electric beats Philips on 11 of the 17 factors compared between the two stocks.
About Emerson Electric
Emerson Electric Co., a technology and engineering company, provides various solutions to industrial, commercial, and residential markets worldwide. The company's Automation Solutions segment offers software; measurement and analytical instrumentation; valves, actuators, and regulators; industry services and solutions; process control systems and solutions; and digital plant solutions. This segment serves oil and gas, refining, chemicals, power generation, pharmaceuticals, food and beverages, automotive, pulp and paper, metal and mining, and municipal water supplies markets. Its Commercial & Residential Solutions segment provides services for climate control industry, such as residential heating and cooling, commercial air conditioning, and commercial and industrial refrigeration. This segment supplies compressors; thermostats; monitoring equipment and electronic controls for gas and electric heating systems; gas valves for furnaces and water heaters; ignition systems for furnaces; sensors and thermistors for home appliances; and temperature sensors and controls. It also offers reciprocating, scroll and screw compressors; precision flow controls; system diagnostics and controls that provide precise temperature management; and environmental control systems. This segment also provides tools for professionals and homeowners; and appliance solutions. The company was formerly known as The Emerson Electric Manufacturing Company and changed its name to Emerson Electric Co. in 2000. Emerson Electric Co. was founded in 1890 and is headquartered in St. Louis, Missouri.
Koninklijke Philips N.V. operates as a health technology company worldwide. It operates through Personal Health, Diagnosis & Treatment, Connected Care & Health Informatics, and HealthTech Other segments. The company offers mother and child care, and oral healthcare products; male grooming and beauty products; kitchen appliance, coffee, air, garment care, and floor care products; and sleep, respiratory care, and respiratory drug delivery products. It also provides diagnostic x-ray, integrated clinical, magnetic resonance imaging, computed tomography, and molecular imaging solutions. In addition, the company offers interventional x-ray systems, and imaging and therapy devices for coronary artery and peripheral vascular disease; imaging products; guidance for cardiology, general imaging, obstetrics/gynecology, and point-of-care applications; and proprietary software to enable diagnostics and intervention. Further, it provides enterprise wide patient monitoring solutions; patient analytics and monitoring, and clinical decision support systems; therapeutic care products; patient monitoring and therapeutic care consumables; and customer services. Additionally, the company offers healthcare information technology (IT), clinical, and visualization and quantification informatics solutions for radiology, cardiology, and oncology departments; universal data management solutions, picture archiving and communication systems, and integrated electronic medical record systems; clinical and hospital IT platforms; technology-enabled monitoring and intervention, actionable program, cloud-based, and population health management software solutions. It also provides HealthSuite Cloud, Premise, Insights, Consumer Engagement, and Clinical platforms. The company was formerly known as Koninklijke Philips Electronics N.V. and changed its name to Koninklijke Philips N.V. in May 2013. Koninklijke Philips N.V. was founded in 1891 and is headquartered in Amsterdam, the Netherlands.
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