Can Emerson Electric Keep Lighting It Up in 2013?

As 2013 begins, now's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Emerson Electric (NYSE: EMR  ) . The electrical equipment maker managed to charge shareholders up in 2012, but with competition heating up in the industry, the coming year may present new challenges for Emerson. Read on to learn more about Emerson Electric's prospects for 2013.

Stats on Emerson Electric

Average Stock Target Price

$55.42

Fiscal 2013 EPS Estimate

$3.59

Fiscal 2014 EPS Estimate

$3.97

Fiscal 2013 Sales Growth Estimate

2.6%

Fiscal 2014 Sales Growth Estimate

5.3%

Forward P/E

13.9

Source: Yahoo! Finance.

Will Emerson Electric charge ahead in 2013?
Analysts aren't terribly optimistic about Emerson's future prospects for investors right now. Although they project modest earnings increases of 6% and 11% over the next two years and reasonable revenue growth as well, their target price on the stock is less than 1% higher than its current price.

Consolidation was the name of the game in the electrical equipment industry in 2012, and now, the companies that spent big money on acquisitions need to prove their moves were financially sound. Eaton's (NYSE: ETN  ) purchase of Cooper Industries and ABB's (NYSE: ABB  ) buyout of Thomas & Betts made those competitors bigger, but with Eaton having paid $11.8 billion, the company will have to work hard to demonstrate that it got its money's worth. That, in turn, could give Emerson some flexibility that its acquisition-laden peers will lack.

At the same time, Emerson has to watch out for General Electric (NYSE: GE  ) , which is making its own drive toward boosting its presence in energy infrastructure. Although GE's foray into the mining equipment industry may distract the company somewhat, energy will remain a big growth area for the conglomerate, and CEO Jeff Immelt is convinced that GE can beat Emerson it if follows the right approach.

Still, the key for Emerson is to keep playing its own game. Recent successes such as its well-regarded data-center infrastructure management and its clean-energy optimization technology show how well Emerson can do when it focuses on its core business. If Emerson doesn't let merger and acquisition activity in the industry distract it, it should be able to keep growing.

Can you find winners better than Emerson?
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Click here to add Emerson Electric to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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