DCF Studio

    EMR · NYQ · Industrials

    Emerson Electric Co.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 65.90

    Market price

    USD 165.96

    Implied upside

    -60.3%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-09-30

    Current EV/EBITDA of 20.7x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 65.90-60.3%
    Exit multiple
    USD 128.12-22.8%
    Market price
    USD 165.96

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 18.9bnUSD 20.0bnUSD 21.0bnUSD 22.0bnUSD 23.0bnUSD 23.9bnUSD 24.8bnUSD 25.6bnUSD 26.3bnUSD 27.0bn+4.0%
    EBITUSD 3.3bnUSD 3.5bnUSD 3.7bnUSD 3.9bnUSD 4.0bnUSD 4.2bnUSD 4.3bnUSD 4.5bnUSD 4.6bnUSD 4.7bn+4.0%
    NOPATUSD 2.6bnUSD 2.8bnUSD 2.9bnUSD 3.0bnUSD 3.2bnUSD 3.3bnUSD 3.4bnUSD 3.5bnUSD 3.6bnUSD 3.7bn+4.0%
    Add depreciation & amortisationUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 1.9bnUSD 2.0bnUSD 2.0bnUSD 2.1bn+4.0%
    Less capital expenditureUSD -441.7mUSD -571.9mUSD -712.7mUSD -863.3mUSD -1.0bnUSD -1.2bnUSD -1.4bnUSD -1.5bnUSD -1.7bnUSD -1.9bn+17.7%
    Capex, % of revenue2.3%2.9%3.4%3.9%4.5%5.0%5.5%6.0%6.6%7.1%-
    Less increase in working capitalUSD -190.3mUSD -226.9mUSD -223.0mUSD -217.2mUSD -209.4mUSD -199.7mUSD -187.9mUSD -174.2mUSD -158.7mUSD -141.5m-3.2%
    Free cashflow to firmUSD 3.5bnUSD 3.5bnUSD 3.6bnUSD 3.7bnUSD 3.7bnUSD 3.8bnUSD 3.8bnUSD 3.8bnUSD 3.8bnUSD 3.8bn+1.0%
    Discount factor0.95780.87870.80620.73960.67850.62250.57110.52400.48070.4410-
    Present valueUSD 3.3bnUSD 3.1bnUSD 2.9bnUSD 2.7bnUSD 2.5bnUSD 2.4bnUSD 2.2bnUSD 2.0bnUSD 1.8bnUSD 1.7bn-
    Present Value Of The ForecastUSD 24.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.140Reported 1.209, pulled toward 1.0 (Blume)
    Cost of equity9.72%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 9.1x interest cover. Book interest / average debt was lower, at 3.5%.
    Market capitalisationUSD 92.6bn87.1% of capital
    Total debtUSD 13.8bn12.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.00%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 65.90

    50% of EV

    Forecast FCFF, final year
    USD 3.8bn
    Capex at depreciation, working capital in reinvestment
    USD 5.0bn
    Less reinvestment at g/ROIC (27.8% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 3.6bn
    ROIC (WACC floor)
    9.0%
    Terminal value, undiscounted
    USD 56.6bn
    Terminal value, discounted
    USD 25.0bn
    Enterprise value
    USD 49.6bn
    Less net debt
    USD 12.2bn
    Equity value
    USD 37.3bn

    Exit at 20.0x EBITDA

    Value per shareUSD 128.12

    71% of EV

    Terminal value, undiscounted
    USD 136.6bn
    Terminal value, discounted
    USD 60.2bn
    Enterprise value
    USD 84.8bn
    Less net debt
    USD 12.2bn
    Equity value
    USD 72.6bn

    Spread between methods: 64%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.00%96.9596.7196.7297.0597.86
    8.00%79.3978.1676.9375.6974.46
    9.00%67.9866.9465.9064.8763.83
    10.00%58.8757.9857.1056.2155.33
    11.00%51.4350.6749.9049.1448.38

    Outlined: this model. Green text: above today's price of 165.96. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year9.3%4.1%14.3%
    EBIT margin19.6%17.5%44.3%
    Discount rate-9.0%5.3%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.