Portfolio Update
The FiveTwenty portfolio received no dividends in the past week.
| Past Week Dividend | $0 |
| Current Quarter Dividend (Q2 2023) | $312.68 |
| LifeTime Dividend | $10,486.26 |
| Estimated Annual Dividend | $9,078.06 |
The capital allocation for the week of 04/30/2023 to 05/06/2023 will be used to add to our position in Emerson Electric Co (NYSE: EMR).
EMR – Position Update
Since our last check-in on EMR in week 41 of 2022, the company reported Q4 and FY 2022 earnings on 10/31/2022, and Q1 2023 earnings on 02/08/2023. In addition, the share price increased 7% from $77.83 to $83.26.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 66 years | 65 years | |
| Yield | 2.49% | 2.65% | 2.85% |
| Payout Ratio | 41.56%1 | 41.78%2 | |
| P/E | 16.721 | 15.792 |
1 computed using TTM adjusted EPS of $4.98 as of Q1 2023
2 computed using TTM adjusted EPS of $4.93 as of Q3 2022
Q1 2023 earnings report
Did EMR’s latest earnings report raise any warning flags?
In Q1 2023, EMR continued to make changes to its financial reporting framework to reflect its portfolio adjustments. EMR started reporting earnings for Climate Technologies, InSinkErator and Therm-O-Disc as discontinued operations. The remaining underlying business has had a solid quarter despite a higher-than-expected impact from stock compensation. Net earnings for the quarter are hard to parse out as EMR does not report adjusted net earnings and GAAP earnings include 2 billion in proceeds from the sale of discontinued operations. Overall, revenue grew 7%, and adjusted EPS were 1.3% lower than in Q1 2022.
| Revenue (in millions) | Net Income (in millions) | Adjusted EPS . | |
| Q1 2022 | $3,156 | – | $0.79 |
| Q1 2023 | $3,373 | – | $0.78 |
| % Change | 7% | – | (1.3)% |
Additional noteworthy developments during the quarter:
- As part of the Q1 2023 earnings report, EMR declared a quarterly dividend of $0.52 per share payable 03/10/2023 to shareholders of record 02/17/2023.
- The company also announced during the quarter that is has selected St. Louis as its global headquarters.
Looking ahead, EMR projects net sales growth of 8% – 10% and adjusted EPS of $4.00 – $4.15 for FY 2023.
Thesis
Why are we adding to our position in EMR?
The company has executed well against its portfolio adjustment strategy. Therefore, our long-term belief in the company remains intact. With this weeks capital allocation to build our holdings in the company at what we consider a fair valuation.
Previous Articles
- 2022 Week 41: Emerson Electric Co (NYSE: EMR)
- 2022 Week 38: Emerson Electric Co (NYSE: EMR)
- 2022 Week 36: Emerson Electric Co (NYSE: EMR)
Additional Research
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