Emerson's buyback jump puts its cash forecast to the test
The automation company plans much larger share repurchases, with an early push. Almost all its expected annual free cash flow already has a destination.
Ticker Byline
Emerson Electric Co.
Emerson supplies industrial automation software, control systems, sensors, valves and test-and-measurement technology.
- Ticker
- EMR
- Exchange
- XNYS
- SEC CIK
- 0000032604
Emerson Electric Co. (NYSE: EMR) sells automation software, control systems, sensors, valves and test-and-measurement technology. Customers use its products and services to run industrial processes, monitor equipment and develop or test technology.
Growth and cash in fiscal 2026
| Measure | 2026 | 2025 |
|---|---|---|
| Revenue | 18.982 | 18.016 |
| Net income attributable to shareholders | 2.691 | 2.262 |
| GAAP diluted EPS | $4.79 | $3.99 |
| Adjusted diluted EPS | $6.59 | $6.01 |
| Operating cash flow | 3.978 | 3.676 |
| Free cash flow | 3.535 | 3.245 |
Free cash flow subtracts capital expenditures from operating cash flow. Capital spending was $443 million in fiscal 2026. The company had forecast approximately $3.6 billion of free cash flow in August.
The comparative earnings figures reflect a pension-accounting change announced in October. Emerson now recognizes annual actuarial gains and losses when they arise and excludes that adjustment from adjusted EPS. Adjusted EPS also excludes intangible amortization, restructuring and specified other items.
Software & Systems had the strongest growth among the company's major business groups. Final-quarter underlying sales increased 14% in that group, compared with 4% in Intelligent Devices and 2% in Safety & Productivity.
Emerson completed its purchase of the remaining AspenTech shares on March 12, 2025. AspenTech ceased to have outside minority shareholders from that date. In August 2026, Emerson announced it had acquired Glue, whose software supports AI-assisted test planning and validation within its NI business. The price was not disclosed.
The fiscal 2027 outlook
Emerson forecasts about 5% sales growth, both reported and excluding currency effects and significant acquisitions or disposals. It expects reported diluted earnings of about $5.70 a share and adjusted earnings of about $7.25. The adjusted figure removes about $1.41 of intangible amortization and $0.14 of restructuring and related costs per share.
Capital returns in fiscal 2027
Emerson plans about $2.5 billion of share repurchases and $1.3 billion of dividends, compared with $1 billion of buybacks and $1.244 billion of dividends paid during fiscal 2026.
About $1.5 billion of the planned buybacks falls in the first fiscal quarter. The annual free-cash-flow forecast is $3.8 billion to $3.9 billion, based on operating cash flow of $4.3 billion to $4.4 billion and about $500 million of capital spending.
The new quarterly dividend is $0.595 a share, a company-stated increase of 7%. The larger repurchase plan is a separate use of cash from that recurring dividend.
The annual return plan sits within Emerson's fiscal 2026 to fiscal 2028 framework: $10 billion of cumulative shareholder returns, comprising $6 billion of buybacks and $4 billion of dividends.
The balance sheet
At September 30, cash and cash equivalents were $1.806 billion. Short-term borrowings and current debt maturities were $4.667 billion, and long-term debt was $7.508 billion.
Future reports can test the pace of the buybacks, delivery of the cash forecast and how the balance sheet changes alongside shareholder returns. Read our analysis of the fiscal 2027 payout plan.
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