Emerson Electric (NYSE:EMR) has raised its dividend annually over the last 65 years, and there's probably a lot more to come. The company will release its fiscal fourth-quarter earnings on Nov. 3. There's a lot to look forward to from the report and from the company in 2022 as well. Here are three reasons the stock is attractive for investors.

A buy button on a keyboard.

Image source: Getty Images.

1. Emerson Electric is back

A quick look at Emerson's underlying sales trend shows how it's back in growth mode.

Emerson Electric underlying sales growth.

Data source: Emerson Electric presentations. YOY = year over year.

Although the fiscal third-quarter 2021 numbers are flattered by the very easy comparison with the fiscal third quarter of 2020 that ended in June, when the lockdowns were initiated, there's little doubt that the company is growing again.

For example, trailing-three-month orders increased enormously, and they are likely to convert to revenue in the coming quarters.

Trailing-Three-Month Orders

January 2021

February

March

April

May

June

Automation solutions (decline)

(12%)

(9%)

(5%)

2%

8%

17%

Commercial and residential solutions

16%

14%

21%

39%

51%

43%

Total Company

(3%)

(2%)

4%

14%

21%

26%

Data source: Emerson Electric presentations.

The commercial and residential solutions (energy efficiency and climate technology, food quality, refrigeration, heating, and air conditioning technology) continue to grow in line with the reopening of the global economy.

However, the inspiring news comes from the return to growth of automation solutions (process, hybrid, and discrete automation). Investors already know that peer Rockwell Automation (NYSE:ROK), a company Emerson tried to buy in 2017, is seeing accelerating growth in 2021.

Moreover, with the price of oil above $80, it's likely many of Emerson's customers in the oil and gas and chemicals industry will be either releasing funds for projects delayed during the pandemic or investing new money into new projects. Together, oil and gas, refining, and chemicals generate more than a third of the company's revenue.

Emerson Electric's end markets chart.

Data source: Emerson Electric presentations. 2020 Data.

2. The Aspen Technology deal is a game-changer

The deal to contribute some of Emerson's software businesses and $6 billion in cash to Aspen Technology in return for a 55% stake in the new Aspen is an exciting one for both groups of investors. It will create a company with $1 billion in revenue with the significant financial firepower to make further bolt-on acquisitions.

In addition, given Aspen's focus on industrial software to the energy and process industries, it's a highly complementary one. For example, it's a leader in asset optimization software. Essentially, manufacturing execution systems software operates on a plant level to improve the performance of process industries. One example of Aspen's technology in action could be in the early detection of a potential equipment failure that allows an asset owner to deal with the problem while keeping the plant running.

Given the rapidly advancing developments in the industrial internet of things and analytical capabilities, it's likely that widescale adoption of asset-optimization software will take place. That's excellent news for Aspen Technology and Emerson, while the value proposition of investing in Emerson's automation will increase with the growth of industrial software.

3. Emerson Electric's valuation is attractive

Finally, based on management's guidance for free cash flow (FCF) of $3 billion, Emerson trades at less than 20 times its FCF. That's a reasonable valuation for a company set to grow earnings strongly in the coming years. Throw in some upside from oil- and gas-related spending and the Aspen Technology deal, and Emerson Electric is an excellent stock to buy right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.